There are two things all Americans can agree on: We love our Olympic athletes and we hate taxes. That means we can all agree on exempting Olympic athletes from paying taxes on their Olympic winnings, right? Well, maybe not.
The first thing you should know is that Olympic gold medals are a misnomer. Although the medals weigh 531 grams, there are only six grams of actual gold in each medal. The balance is silver. At today’s street value for both metals, a gold medal is worth approximately $550. That amount is considered taxable income to medal winners.
In addition, the U.S. Olympic Committee (USOC) pays a bonus for each medal won, $25,000 for gold, $15,000 for silver and $10,000 for bronze. We aren’t talking about a lot of money per athlete, although for multiple medal winners – think Michael Phelps, winner of 18 gold medals and a record 22 medals overall – the money can add up. In 2010, the U.S. finished first in total medals at the Vancouver Winter Games and our athletes earned $580,000 in bonuses. We finished second in medals overall in Sochi and as a result the USOC will pay out $450,000 in bonuses.
With more events and more athletes, the medal count for the summer games is much higher. The USOC paid $1.48 million for the medal haul at the London Olympics in 2012. Although the tax on medal earnings may be significant to individual athletes, it hardly makes a dent in our multi-trillion-dollar debt.
Other countries are much more generous to their medal-winning athletes. For example, at the Sochi Winter Games Italy offered $191,000 for gold, Latvia $192,000 and Kazakhstan topped all countries with a bonus offer of $250,000. For the record, none of those countries had to fork over any bonus money for gold.
In addition to bonuses for taking home medals, most countries provide direct subsidies to their Olympic athletes. Our athletes should be so lucky. The top ranked athletes may get stipends ranging from $400-2,000 per month from the USOC and additional subsidies may come from the National Governing Body for their individual sport. But those payments are only available to elite-level athletes. Athletes also get access to Olympic Training Centers, but because the Centers are in the business of making money, most athletes have to pay to stay at and use the facilities. Ironically, more foreign athletes use the Training Centers than U.S. athletes because their home countries are willing to pay the established rate to subsidize them.
The sacrifices made by would-be Olympians and their families, both personal and financial, can be staggering. It costs as much as $100,000 per year to keep an Olympic athlete in training, including the cost of coaching, travel, living expenses and practice facilities. That figure doesn’t include the lost income of both the athlete and his or her family. More than one Olympic-hopeful family has endured financial hardship, including bankruptcy, on the road to an Olympic medal podium.There are exceptions. Snowboarder Shaun White is a marketing machine, earning an estimated $5 million per year in endorsements. Forbes recently estimated his net worth at $20 million.
Every time the Olympics roll around, someone in Congress introduces a bill to exempt our athletes from paying taxes on the value of their medals and bonuses. This year it was Senators Johnny Isakson (R-GA) and John Thune (R-SD). In a rare show of bipartisanship, President Obama voiced support for the measure. But not all lawmakers – or their constituents – are on board with the idea. Those opposed point to the fact we tax other prize winners, including Nobel, Pulitzer, and, for that matter, lottery and Publisher’s Clearing House, to name a few. Why muddle up the tax code even further with another exemption, they ask.
Although the athletes aren’t tax exempt, the USOC is. According to published financial documents, the Committee generated $353 million in revenue in 2012. And while most Olympic athletes struggle to survive, the same can’t be said for USOC employees. In 2012, eighty-three USOC executives were paid at least $100,000 and fourteen of those executives took home more than a quarter of a million dollars each. CEO Scott Blackmun earned $965,000.
Their income is taxable. Should the same be true of Olympic medal winners?
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor in the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com Jordan can be reached at email@example.com.
© Copyright 2014 Tanna K, All rights Reserved. Written For: Tinytown Unleashed