American athletes who win any medals at the ongoing Summer Olympics in London may have to pay hefty taxes upon their return, reported Bloomberg News on Thursday, with the cost of a single gold medal believed to be worth $8,986 in taxes.
Swimmer Ryan Lochte, the most-decorated American athlete thus far with two gold medals and a silver, for instance is likely to have to pay a tax bill of $23,357 for his efforts, according to the Americans for Tax Reform (ATR) advocacy group, as cash rewards given to him by U.S. Olympic Committee were considered as income by law and thus had to be subjected to taxes.
Similarly, 17-year-old swimmer Missy Franklin, an amateur who has yet to cash in on her fame with endorsements, would owe the IRS at least $14,000 in taxes as she has won an Olympic gold and silver medal thus far.
The ATR, which opposes tax increases "as a matter of principle," noted that because the U.S. was one of only a few countries that taxed its citizens for income earned overseas, American athletes would have to pay taxes for their medals unlike most other competitors at the games.
Florida Senator Marco Rubio, who is now attempting to introduce a bill that will make Olympic income tax-exempt, also said that the American tax code was “a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness.”
For every gold medal won at the London games, a U.S. athlete will receive an honorarium worth $25,000 from the U.S. Olympic Committee. A single medal would also garner you $15,000, while a bronze medallist would receive $10,000.
Consequently, based on America’s internal revenue code, these athletes would also have to face taxes of $8,986, $5,385 and $3,502 for every gold, silver and bronze medal respectively.
"We need a fundamental overhaul of our tax code, but we shouldn't wait any time we have a chance to aggressively fix ridiculous tax laws like this tax on Olympians’ medals and prize money," said Rubio, as cited by the Miami Herald.
"We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."
Rubio is proposing the Olympic Tax Elimination Act, which “would amend the Internal Revenue Code of 1986 to eliminate the tax on Olympic medals and prize money won by United States athletes.”
“If enacted into law, the gross income of Olympic athletes shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games,” said a statement from Rubio’s office, who added that the proposed bill would apply to prizes won at this games.
As of press time, U.S. athletes have won 64 medals — 27 golds, 18 silvers and 19 bronzes — which comes to a tax bill of nearly $350,000. The 35-percent tax rate for income would applies to both the prize money and the raw value of the medal itself, which would be based on today’s commodity prices.
The U.S. Olympic Committee also noted that athletes could receive additional rewards from non-governmental bodies, which would be taxable as well.