Today Michael Phelps and the five members of the U.S. women's gymnastics team got a treat when President Obama called them from Air Force One to commend them on their Olympic victory and make awkward small talk. ("I told these young ladies as I was congratulating them, how do you not bust your head every time you're on that little balance beam?" Obama said. "I couldn't walk across that balance beam.") However, the most exciting news came later in the day, when the Olympians learned that thanks to some grandstanding by Senator Marco Rubio, they might get to save a few thousand dollars on their taxes.
Rubio announced at a press conference that he's introducing a bill to make prize money won at the Olympics exempt from taxes, according to CBS News. While Olympians usually only talk about striving for the honor of winning a medal, they also earn cash payments from the U.S. Olympic Committee: $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Rubio's spokesman said questions about the Olympians' taxes were brought to his attention by Grover Norquist's Americans for Tax Reform. On Tuesday, the group wrote in a blog post that "American medalists face a top income tax rate of 35 percent." Using that figure, they calculated that athletes have to turn over up to $8,986 for gold, $5,385 for silver, and $3,500 for bronze. (They also have to pay taxes on the value of the medals themselves. A gold medal is estimated to be worth $675, silver is about $385, and just to add insult to injury, bronze is worth less than $5.)
Rubio offered this justification for his Olympic Tax Elimination Act:
“Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness. Athletes representing our nation overseas in the Olympics shouldn’t have to worry about an extra tax bill waiting for them back home.”
It's unclear how adding new tax exemptions is supposed to make the tax code less complicated, and the word extra is also misleading. There's no special tax on Olympics earnings; the prize money and medals are just included with the rest of an athlete's income. According to Politifact, Americans for Tax Reform's suggestion that most Olympians will be giving the IRS 35 percent of their medal-related money is "mostly false." While the group's calculations may be correct for Michael Phelps, Olympians who've yet to score lucrative endorsement deals are probably earning far less and are thus paying a lower tax rate on the money they make at the games (which many news reports didn't make clear, since apparently the media is still confused about how the tax system works).
While paying taxes certainly feels like a punishment, some would argue that it's actually patriotic. Plus, according to Politifact, the "extra" tax athletes pay on their prizes would actually be balanced out by Olympians deducting things like travel fees, payments to coaches, and the cost of equipment as business expenses. Of course, we're not saying that Olympians don't deserve a special tax exemption. Only a jerk would suggest that they should just pay the amount of taxes required by law, rather than getting a tax break for being inspiring and lovable.