Creating a new tax loophole for Olympic medalists is a terrible idea
Sen. Marco Rubio (R-Florida) wants America’s Olympic medalists to get a tax break.
He’s introduced a bill that would make the value of the actual medal and the cash prizes Olympic winners receive from the U.S. Olympic Committee ($25,000 for gold, $15,000 for silver and $10,000 for bronze) tax-exempt.
What a bad idea.
All of the numbers Rubio throws around about how much of the winnings athletes must pay in taxes are based on them landing in the top 35% income tax bracket.
But to be taxed at that rate, they'd have to make more than $388,350 a year in taxable income (assuming they file as a single taxpayer).
Even our greatest Olympic athletes don’t make that much off medals alone.
Swimmer Michael Phelps, for example, who won four golds and two silvers in London, comes in at just $130,000.
What pushes these athletes into a high tax bracket are the multimillion-dollar endorsement deals they sign with shoe companies, fast-food chains and cereal makers.
So what we’re really talking about is creating a new loophole for multimillionaires to shield a portion of their income from the taxes they legitimately owe.
These elite athletes already are allowed to deduct training costs from their income as work-related expenses.
I spend over $2,000 a year on running-related gear, fees and travel that I get to deduct from my income because I write about the sport for Runners World and the
I can only imagine what an Olympic athlete must spend, and deduct, each year.
Now let’s be clear.
I fully understand the level of sacrifice some of these athletes make.
We’ve all heard the touching stories of how competitors in less popular sports such as archery and kayaking struggle to keep a roof over their heads and food on the table while working part-time jobs that can fit around their training schedules.
But this loophole won’t help them.
Their taxable income is negligible even if they manage to medal in London.
No, this idea will mostly benefit the wealthiest American competitors who need it the least.
It becomes just another tax dodge for those professional athletes who play popular spectator sports and were millionaires long before they reached London -- think LeBron James and his buds on the U.S. basketball team.
Or it will help the handful of athletes who captured our imagination at these games -- and cashed in with million-dollar endorsement deals.
Consider Gabby Douglas, the 16-year-old who won the women’s all-around gymnastic title last week and was paid $90 million to be on boxes of Kellogg Corn Flakes this week.
Natalie Hawkins, Gabby’s mom, worked hard and made untold sacrifices to get her daughter on that Olympic podium. According to the celebrity gossip website TMZ, she even had to file for bankruptcy earlier this year.
I don’t begrudge either of them one cent of that money. You go, girls!
But it doesn’t mean we owe them, or anyone else on the U.S. team, special treatment on their income taxes.
This proposal is a glaring reminder of what’s wrong with our tax code today.
It’s riddled with exceptions such as this that are specifically created to allow a few high-income individuals and very profitable corporations to pay less than their fair share of taxes.
That’s why this whole thing strikes me as a cynical PR stunt by Rubio to capitalize on the national pride we feel watching our fellow Americans compete in London.
Let’s not do it.