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The Price Tag of Olympic Gold

As Olympians wrap up competition in the 2016 Summer Olympics in Rio de Janeiro Brazil, a tax bill may be waiting for them back in the United States.  Unlike most other countries, the US taxes the winnings of its Olympians.  This includes a tax on the gold, silver, or bronze medals as well as product endorsements and bonuses provided by the US Olympic Committee (USOC).  The taxes are administered at a federal and state level based on income tax of each jurisdiction.

Many other countries provide government subsidized funding to their Olympians and exempt their athletes from taxes on Olympic earnings.  Only a few fortunate US Olympians are able to secure significant endorsement deals.  Many athletes are supported by small stipends from the USOC, financial support from local businesses, or regular jobs.  Most US athletes pay for their own training, travel, coaches, and equipment while the USOC pays for health insurance.

With every Olympic victory, the price tag of tax grows for athletes.  Commonly referred to as the “victory tax”, it is an income tax on the winnings from both the money received and medal value.  The USOC provides gold medalists with $25,000, silver medalists with $15,000, and bronze medalists with $10,000 in cash bonuses for each medal earned.  The monetary value of the medals themselves ranges from $4 (bronze) to $600 (gold) based on current commodity prices and their precious metal content.  Athletes may pay as much US tax as 39.6% on their winnings.  The Americans for Tax Reform has calculated an estimated maximum tax on the medals at $9,900 for gold, $5,940 for silver, and $3,960 for bronze.

The Brazilian Mint used approximately 172 ounces of gold to produce 812 gold medals, 1.6 metric tons of silver in the gold medals and 812 silver medals.  This totals to over $230,000 of gold and over $1,000,000 of silver at current commodity prices.  The Brazilian medals are roughly 100 grams heavier than the 2012 London Olympic medals weighing in at 500 grams each.  The gold medals contain only 6 grams of gold and 494 grams of silver.  Silver medals contains 92.5% pure silver. The bronze medals contain 475 grams of 93.7% pure copper and 25 grams of 3% pure zinc.

The debate has continued for years regarding whether US athletes should be taxed at all on their Olympic earnings.  In 2012, Republican Florida Senator Marco Rubio led a bill to allow London Olympics athletes exemption from the tax on their winnings (The Olympic Tax Elimination Act), but it never made it to the Senate floor for a vote.  Speculation was that Congress might have been seeking a more comprehensive tax reform package.

In March 2016, Republican Senator John Thune and Democratic Senator Chuck Schumer sponsored a bill (S. 2650 – 114th Congress 2015-2016) United States Appreciation for Olympians and Paralympians Act to eliminate taxation on Team USA Olympians and Paralympians.  The bill was passed on July 12, 2016 by the Senate’s unanimous vote.  A similar bill (H.R. 2628) called the TEAM Act is currently residing in the House of Representatives and is awaiting its chance to come up for a vote.

As of the date of this article, the US leads the medal count with 100 medals total.  The impact of the proposed bill remains to be seen for the 2016 US Olympians returning home from Rio.  If passed, the bill would exempt their earnings.  If not passed by year end 2016, the Olympians should expect to be taxed on their earnings for the 2016 tax year.

 

Allyn Contributor: Trisha Davidson

 

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