Should U.S. Olympians be Exempt from Paying Taxes on Medals and Prize Money?

Senator Marco Rubio from the State of Florida proposed a bill to the United States Senate in favor of exempting U.S. Olympic medalists from paying Federal taxes on their medals and prize money. The current U.S. tax code holds that the value of Olympic medals and prize money must be added to the Olympian’s taxable income. The medals and prize money are then taxed at a rate of 35% by the IRS.

According to Americans for Tax Reform, a gold medal is valued at approximately $675, resulting in a tax of $236. In addition to earning a medal, Olympic medalists also receive cash prizes of $25,000 for earning a gold medal, $15,000 for earning a silver medal, and $10,000 for earning a bronze medal. This would mean that an Olympian who earned the gold medal would pay $8,750 in Federal taxes. An Olympian who earned a silver medal would pay $5,250 in Federal taxes. Lastly, an Olympian who earned a bronze medal would pay $3,500 in Federal taxes.  

Senator Rubio’s bill proposes to eliminate the tax on Olympic medals and prize money won by athletes representing the United States in the Olympics. However, there is a hint of unfairness to this bill because there are several other tax codes that should also be eliminated or revised if this bill becomes a law. For example, should individuals receiving monetary gifts exceeding $13,000 be taxed on the gift? After all aren’t gifts supposed to be free? And if someone is blessed to have someone leave them a large estate as an inheritance, should they be taxed to receive it? Should athletes be taxed on the endorsement money they receive simply because a company desired to have them be the spokesperson for their product? Should lotto winners and gamblers pay taxes on the money they won as a result of luck? Should U.S. Citizens earning income abroad be taxed on that income?

When one chooses a career path,  one must be willing to accept the tax consequences that follow. For example, a doctor who saves hundreds or perhaps even thousands of lives is not exempt from Federal taxation. A teacher who is responsible for educating our political leaders is not exempt from Federal taxation. An Amateur or a Professional Gambler is not exempt from Federal taxation. Not even the President of the United States who is responsible for running the United States is exempt from Federal taxation.

So what makes Olympic athletes any different? Surely the athletes are not solely interested in representing their country just for the bragging rights, there has to be some financial motivation behind it. And should an athlete come forward and deny the financial motivation behind making the Olympic team and winning a medal, then that athlete should not be distraught by the tax consequences that result from winning a medal.

Now I will agree that the tax on the medal should be removed because even if the Medal is made of real gold, silver, or bronze, it should not be taxable unless sold by the Olympian for cash value. However, the tax on the prize money should not be eliminated because their job is essentially to be an athlete, and any income earned because of their athletic ability should be taxed.

There are men and women who have devoted their lives to representing our country, and the only portion of their income that is exempt is when they are sent to a combat zone. These men and women deserve to have their full income exempt because they are risking their lives to protect the lives of others. However, no amount of money can compensate for the risk associated with working in a combat zone. Although being an athlete in the Olympics is similar to being in a combat zone because of the battle amongst nations to prove whose athletes are the best, the athletes are not risking their lives to protect the lives of others.

I am very proud of our Olympians, but an Olympian winning a medal only incites country pride and the occasional bragging rights. It does not equate and should not be equated to the safety and peace of mind that the men and women in our military provide. As a result, any prize money earned by an athlete, whether it is earned from participating in the Olympics or not, should be taxed. Taxation is the consequence of earning income both in the United States and abroad, and Olympic athletes should not be exempt.