Tax the Olympic Medal Money: Should be No Difference

The House Ways and Means Chairman Dave Camp (R-MI) issued a statement today that Olympic athletes who wins prize money as a result of winning a medal should not be taxed money received. A gold medal is worth$25,000 in cash, $15,000 for a silver and $5,000 for  a bronze. Mr. Camp believes that this is another way of honoring this incredible sport men and women. Senator Marco Rubio (R-FL) made a similar proposal yesterday.

What a bad idea and bad tax policy. The are a few reasons that come to mind

1. What makes this income so special? What about money from a game show, the lottery, a bonus for a job well done, reward money for catching a criminal? It is long settled that prize money is income under section 61 of the IRC. 

2. The Olympics is a money making proposition and a definite for profit enterprise. The IOC is a rich organization Its heads live like kings, getting paid handsomely and in the past got  kickbacks and bribes from about everyone. They sell the media right for billions and billions. The point being, everyone involved is in it for the money, the glory left the station long time ago. 

3. The athletes make tons of money too. Michael Phelps is way above the 1% mark. I read somewhere that he earns over $7 million a year just in endorsements. Of course, some of the minor medal winners in minor sports are not so taken care of but where is the line to be drawn? What about his marginal tax rate? 

4. Why just Olympics? How about the Nobel prize money? Teacher of the year prize? Why is this so special?

5. The money is not a  gift. This is their job, to train, to compete. If they do it well, like the rest of us, they may get a bit  extra. 

I say, you get the dough, you pay the tax. Mr. Camp is right to be proud of these sport representative of our country but after all, it is just sport, not some heroic, life saving , or positive world changing endeavor. 

Some people I know are always amazed that prizes are taxed. Like on those games shows where you win the car but can not pay the taxes. It is no different that your salary or any other income you earn. 

 So, bad tax policy but a good headline. Hard to say because I am a huge Olympic fan, attending two past games.