SALON

Thursday, Aug 2, 2012 8:26 PM UTC

Romney’s Olympic tax myth

Republicans are outraged that Obama will tax Olympic athletes. Why he probably won't, but he should anyway

By

Topics: Olympics, 2012 Olympics, Mitt Romney, Marco Rubio, Taxes,

Romney's Olympic tax mythFrom left, United States' Michael Phelps, United States' Conor Dwyer, United States' Ricky Berens and United States' Ryan Lochte pose with their gold medals for the men's 4x200-meter freestyle relay swimming final at the Aquatics Centre in the Olympic Park during the 2012 Summer Olympics in London, Tuesday, July 31, 2012. (AP Photo/Mark J. Terrill)(Credit: Mark J. Terrill)

More than catnip, this latest conservative tax myth is like a designer drug for the Fox News set, tailored perfectly for maximum impact at a time when Americans are hungry for anything Olympics-related. The offense: According to Americans for Tax Reform, Grover Norquist’s anti-tax outfit, President Obama’s IRS will tax Olympic winners up to $9,000 after they return home victorious from London. Conservative blogs are having a field day and Republican politicians are clamoring to capitalize on news. Darling Sen. Marco Rubio of Florida introduced a bill to exempt Olympians’ winnings from taxes and an adviser to Mitt Romney told reporters today, “He believes that there should be no taxation of the type you are describing.” They’re calling on Obama to support the plan.

The only problem: It’s not really true. In addition to their medals, American winners are given prize money from the U.S. Olympic Committee: $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Their medals are also worth about $675, $385 and under $5, respectively. ATR says this all gets taxed at 35 percent, meaning a gold medalist owe $8,986, silver winners owe $5,385, and bronzers owe $3,502.

First off, the medals aren’t subject to taxes. Mark Jones, the communications director for the U.S. Olympic Committee told Salon in an email, “There is no ‘value’ to medals and there is no tax associated with it.”

As for the prize money, according to Politifact, ATR’s claim is “mostly false.” Consulting accountants who have worked with athletes, the fact-checking website noted that while the money is certainly taxable, athletes could deduct all the expenses that went into getting them to the podium, including travel costs, equipment, training and coaching fees from the previous year. Those are all considered business expenses, and could lower or even eliminate an athlete’s tax liability, depending how much they spent. Moreover, the 35 percent rate assumes athletes are in the highest income bracket, earning over $380,000 a year. While some Olympians certainly make millions, the majority of athletes probably do not. Many are barely scraping by, lacking sponsorship deals and unable to work full-time due to training demands. (We wrote yesterday about marathoner Guor Marial, who works from 11 p.m. to 9 a.m. at a home for mentally disabled adults every night so he can spend his days training.) This would put them in a lower tax bracket where they would pay far less, or even nothing, on their winnings, even before deductions.

A quick Nexis search revealed zero stories from 2004 and 2008 about Olympians being taxed for their winnings. One would think, judging by how much attention the story is getting today, that there would have been articles written then about disappointed athletes who returned home to find a hefty tax bill. We did find several stories like that, but they were all from Canada.

Moreover, while it may be politically popular to exempt Olympic winnings, there’s no real reason why they should be treated any differently from, say, the prize money that comes with winning a Nobel or Pulitzer Prize, or even the lottery, all of which are taxed like any other income. Past Nobel laureates have complained about being taxed for their prize, which at about $1.4 million, would produce a much larger bill than the gold medalist’s winnings.

“There is no principled basis to tax Olympic prizes any less than Nobel prizes, earnings or lottery winnings.  If Congress wants to give Olympic winners more money, it should transparently give them more money rather than create an obscure tax expenditure to do exactly the same thing,” David Miller, a tax attorney with Cadwalader, Wickersham & Taft LLP in New York, told Salon.

So Rubio and Romney, are Nobel laureates any less deserving than Olympians of special treatment?

Alex Seitz-Wald

Alex Seitz-Wald is Salon's political reporter. Email him at aseitz-wald@salon.com, and follow him on Twitter @aseitzwald. More Alex Seitz-Wald.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 27 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Journalists file suit against Manning's trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
148 points149 points | comment
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
132 points133 points | 91 comments
vote
Report: Nearly a quarter of Americans struggle to afford food
129 points130 points | 12 comments
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
115 points116 points | 33 comments
vote
Ted Cruz against the world - How the Junior Senator is igniting the GOP civil war
75 points76 points | 19 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: Chekhov's story mirrors Russia's own

Recommendations