Win Gold at the Olympics and Pay Taxes Like Everyone Else

The group, Americans for Tax Reform has released numbers that appear to show how United States Olympians have to pay an extra $9,000 if they win a gold medal. These numbers are being made into cute little pictures and distributed across social media, but they seem too extraordinary to be true. However, as someone who went to college directly after high school, and then volunteered for two years, income (and income tax) is something still a little new to me so I tried to get some explanation.

I posted on my own Facebook page as well as on an article on the Washington Post website, but no one could satisfactorily prove that the numbers weren’t blatantly bloated.

As I understand it, the 35% income tax bracket for a single person is reserved for individuals making over $379,000. If an American athlete gets a gold medal, he or she would get an honorarium putting him or her in the 15% income tax bracket, and after taxes he or she would still have over $21,000 give or take a couple hundred dollars that looks like what the ATR is valuing the materials of a gold medal on*.

Of course there are endorsement deals and whatever job an athlete is working at the rest of the year. However, to face the tax numbers the ATR is putting out, a gold medalist would probably be making enough to barely notice the chunk taken out of their honorarium.

I wanted to check the numbers before blindly accepting this and feeling outrage on behalf of about (170e^-6)% of our population. For the record, I got that number by finding the actual number of USA athletes (530) and dividing it by the current USA population (a little over 311.5 million). If I was the ATF though, I probably could have just randomly chosen … let’s say .001% and assumed I was right. The real number is less than half of one percent of our population and that works just fine for my point.

And my point is that skewing numbers tends to point out an argument that’s pretty weak to begin with and there are much better things to be incensed about than whether or not someone who has to be making over 300 grand a year is going to have to pay an extra 5 grand to the government or not. And to be constructive, I posit a substitution of concerns: let’s get truly outraged over the state of mathematics education in this country! I heard some people want to let students skip algebra. Let’s make a picture for this to share on Facebook!

What do you think of the tax on Olympic gold?

 

*AmericanThinker.com explains the basis of the taxes:

Besides the actual gold, silver, and bronze medals awarded for the top three Olympians in each event, prizes are also awarded. For the London Olympics, athletes receive $25,000 for gold, $15,000 for silver, and $10,000 for bronze.

There is also a handy chart explaining that for a gold medal, the taxes paid will be $236 and the total federal tax is $8986 when combined with the prize money.

Photo: AP/David J Phillip

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About John Dwyer

John Dwyer is the co-editor for The Strip (adult language but SFW). Learn more about him on his website or contact him through email, Google, and Twitter.

Comments

  1. I think it’s worth pointing out that not every Olympic athlete gets what Americans consider to be professional-level endorsements, and have to incur significant expenses to participate. Take athletes in less popular sports, like women’s weightlifting, or pretty much any Paralympic event. I have a friend who’s a Paralympic powerlifter on her fourth trip to the Paralympics. She doesn’t get corporate sponsorships. This is the first time she hasn’t had to pay for her uniforms, and she needs three – one for opening ceremonies, one for closing ceremonies, and one for competition (incidentally, for all the crap they took about where the uniforms we’re made, Ralph Lauren is the only reason she didn’t have to pay for her uniforms this year – previous designers didn’t pay for Paralympic uniforms). This is on top of the gym time, needing to pay a spotter and athletic trainer with *very* specific skills, and transportation to and from events. AND her ability to get a well-paying job is limited by her physical condition. I don’t know details, but I’m guessing that unless she wins gold (and possibly even then), she will not be paying taxes on her medal and prize money – that income will be offset by all the financial losses she’s incurred to get to London in the first place. And she doesn’t even need to buy specialized equipment to participate in her sport at all (if you watch Murderball, you may notice that you need to pay $3,000 for a special wheelchair before you can even start trying to play wheelchair rugby, and some wheelchair basketball players pay around $15,000 for their chairs – that’s the silver medal prize gone before tryouts). If you aren’t in a high-profile sport (and given that NBC won’t be broadcasting the Paralympics at all, it isn’t one here, and some Olympic sports get similar low-profile status), being an Olympic athlete is not a profitable endeavor. I wonder if ATR is calculating their tax figures counting all those expenses. I’m guessing not.

  2. John Dwyer says:

    That’s a really good point. I wanted to go into how the calculations are actually really complex here. You can’t just say, well all athletes are paying $9,000 in the U.S. for winning, and nothing elsewhere. Income tax has exemptions available to people depending on how they handle their athletic side, whether or not they set themselves up as a business, what expenses can be deducted for that, or for health reasons, or many many other factors. Then you’re also right to say that the expenses to just enter and try out exist, and also differ depending on your sport. The ATR’s report is an over-simplified sham.

  3. Great investigative number work right there. I find in most things (the DOJ muffin story comes to mind), that if the numbers don’t sound right, they’re probably not true.

  4. Peter Houlihan says:

    Does a medal really count as “income”? It’s not like they can spend it or sell it.

    • John Dwyer says:

      Actually you’re completely right on this point. Salon put up a piece (after us here at GMP!) that says mostly exactly what I said, and adds a little investigation which turns up that according to the USOC, the medals technically have no value:

      http://www.salon.com/2012/08/02/romneys_olympic_tax_myth/

      I believe most of the athletes would agree that a gold medal is invaluable and much more than the sum of its parts.

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