The Olympics is a time honored event that celebrates diversity, nationalism and international competition. However, when it comes to the US tax code, Olympians are well aware of how uncompetitive it is internationally. The United States will be one of the only countries to tax their champions on their Olympic winnings and even the medals themselves. Americans for Tax Reform report on this absurdity:
American medalists face a top income tax rate of 35 percent. Under U.S. tax law, they must add the value of their Olympic medals and prizes to their taxable income. It is therefore easy to calculate the tax bite on Olympic glory.
At today’s commodity prices, the value of a gold medal is about $675. A silver medal is worth about $385 while a bronze medal is worth under $5.
There are also prizes that accompany each medal: $25,000 for gold, $15,000 for silver, and $10,000 for bronze.
So how much will U.S. Olympic medal winners have to pay in taxes to the IRS?
Medal Tax Prize Tax Total Tax Burden Gold $236 $8,750 $8,986 Silver $135 $5,250 $5,385 Bronze $2 $3,500 $3,50
It gets even worse. Not only do our Olympic athletes have to pay taxes on their medals and prizes – chances are their competitors on the field will face no such taxation when they get home. Because the U.S. is virtually the only developed nation that taxes “worldwide” income earned overseas by its taxpayers, our Olympic athletes face a competitive disadvantage that has nothing to do with sports.