“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan
Certainly the United States’ Olympic athletes move – and some do so faster than anyone else in the world has ever moved at any time in history – whether on the track, in the pool, on the ice; or if not faster, than more gracefully or with more strength or more agility.
But should these athletes be taxed for the privilege of representing the Stars and Stripes in places like London, Beijing, Vancouver, and Sochi?
To be clear, the Olympians are being taxed if they come home with the hardware – gold, silver or bronze – and are rewarded by the United States Olympic Committee to the tune of $25,000, $15,000, and $10,000 respectively. The USOC is not an arm of the United States government, but an independent organization which raises money from corporate donors and private citizens who wish to support the training and travel of the athletes.
But while the likes of Michael Phelps, Gabby Douglas, and Sanya Richards-Ross have or will strike it rich via endorsements, the overwhelming majority of Olympians toil in obscurity shelling out thousands upon thousands of dollars for coaching, training, travel and private education – in some cases reaching six-figures. Men’s and women’s basketball as well as men’s ice hockey notwithstanding, as they have professional leagues, are not crying poverty, but poverty is a real issue for some of the athletes – see the stories of Douglas and Lo Lo Jones as well known examples.
The overwhelming majority of the athletes return home empty-handed save for the fond memories and photographs they will enjoy for a lifetime. The United States sent 539 athletes to London to compete in sports as well-known as gymnastics, basketball, and soccer, and lesser recognized events as handball and modern pentathlon. American athletes brought home 147 individual gold medals, 59 silvers, and 49 bronze – taking into account team sports count as one medal, but all participants receive one. (www.forbes.com)
Granted, no one is forced to train for the Olympics, but when one is discovered at such a young age with a particular talent, skill, or otherworldly ability, it should be encouraged, nurtured, capitalized upon, and pushed to the limits of human capacity.
It then begs the question, should amateur athletes be subjected to a visit from the IRS upon receipt of the gold, silver or bronze medals? There are those who would say yes, it is income earned for a successful job, such as a commission-earning employee – paid upon making a sale. Like any other employee subject to income tax, they should be taxed. But, by whom are these Olympians employed? Are they contract employees? Sole proprietors of their own business? At what rate should they be taxed? Of course, only the medal winners are subject to the tax, based upon on 35 percent rate.
But there is relief. “Anything used for the production of income is deductible,” said Brad Bell, partner with BGBC Partners, LLP of Indianapolis, specializing in accounting for athletes. (www.politifact.com)
And then there is the absurdity of taxing the actual medals brought home by the Olympians. According to CBS News, the value of a gold medal is $644; silver is valued at $330 and bronze at $4.70. The medal values are based upon July 11 metal prices used by Lear Capital, a precious metals firm. (www.bizjournals.com) These physical medals should not be taxed.
As it is, the United States is the only country to tax worldwide income earned overseas.
In an effort to eliminate the tax on Olympians’ medal earnings, Senator Marco Rubio (R-FL) introduced, on August 1st, the “Olympic Tax Exemption Act.” In doing so, Rubio said “We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it…. Our tax code is a complicated and burdensome mess that too often punishes success.” (www.washtimes.com)
Senator Rubio is absolutely right about not taxing the labors and sweat equity of the Olympians Herculean efforts. That said, why should anyone’s labors be taxed? Why should anyone’s earnings be taxed? Why should anyone’s success be punished?
Are the man hours of a local drycleaners who opened his own business less important than the soccer skills of Hoosier Lauren Cheney? Why should the drycleaner be taxed on his successes? Why should military veterans benefits taxed? They have made the greatest of sacrifices and are often on the short end of the economic stick.
There is a bigger picture at hand here. Instead of taxing income, earnings, and success, tax spending. This would certainly be a progressive tax where the rich, who already pay more than their fair share, would continue to do so. A sales tax would collect more from the buyer of a Cadillac than it would extract from the buyer of, say, a Ford Escort. The big spender buying a yacht would put more into the tax coffers than would a lower earner spending his or her disposable income on a new television.
The Olympics medals experience should be the launching pad for a new and improved system of taxation. Stop punishing success – and this includes dividends and capital gains. Encourage growth by having people keep more of their own money. They can best decide how to appropriate their earnings – reinvest in their businesses, invest in other people’s business – small or corporations – who will create jobs and boost the economy, save for the future so they are not a drain on government, or even contribute to much needed charities.
All Americans need to be able to go for the gold without being punished by a repressive government.