Politifraud did it again this week. Americans for Tax Reform came out with a press release linked to the Olympic fever pointing out that for those athletes that find themselves in to top tax bracket this year, each gold medal will cost them up to $9,000 in taxes. Note the “up to” and “top tax bracket.”
Unfortunately, it’s “mostly true,” at the very least.
I encourage you to read “Politifact’s” “analysis.” The main point that Americans for Tax Reform was making was that the medals earned by athletes and the bonus paid out by the U.S. Olympic Committee are taxable income—an obvious point. ATR calculated what that could mean in endorsements for athletes in popular, lucrative sports. While the medals will surely cost Michael Phelps, the women’s gymnastics winners, the men’s and women’s basketball teams nearly $9,000. It’s unlikely to archery, water polo or synchronized swimming winners that much, but they’ll still pay.
Even if they’re in the 25 percent tax bracket, that medal will cost them several thousand dollars in taxes.
ATR responded very ably to Politifraud’s analysis and it should be noted that Politifraud’s detour into effective tax rates vs. marginal tax rates is at best useless and at worst dishonest.
For the record: I’m not opposed to the taxes on Olympic medals in principle and even less so to the fact that the USOC’s bonus is taxable. It’s income. It’s taxable. Special carve-outs like the one proposed by GOP Sen. Marco Rubio are one of the big problems of the current tax system. The only exception is this, I’d make the value of the medal itself (the gold, silver or bronze), not taxable unless it’s sold by the athlete.