Given the robust disagreements over the tax code happening now — how to tax estates and investment income, whether to tax Warren Buffett at a rate at least equal to his secretary — it’s nice to find a piece of tax law we can all agree is totally warped.
Marco Rubio, the Florida Senator, and Blake Farenthold, the Representative from Texas, have introduced bills (.pdfs here and here) that would repeal the taxes that U.S. Olympians are required to pay when they medal, including taxes on their medals. Currently athletes are on the hook for taxes on the bonuses they receive for medaling (right now that’s $25,000 for gold, $15k for silver and 10 large for bronze, presumably rendered in nickel rollers) and conceivably for the value of the medal itself.
The Washington Post aptly compares this arrangement to “any winning game show contestant [having] to pay taxes on a new car or toaster oven.” A few outlets have taken to suggesting the value of medals by multiplying the value of their constituent metals to arrive at approximate market value prices for them: $644 for gold (which is made mostly of silver), $330 for silver (ditto), and $4.70 for the copper sandwich that is a bronze. This is a preposterous calculation that ignores the not-insignificant detail that it’s an Olympic medal, but certainly if the world financial system melts down and we’re back to bartering ammunition and sexual favors for protection from roving warlords, that metallurgic calculation will seem like more than an afterthought. Till then a medal remains a priceless object, barring a desperate eBay auction.
It’s not clear that anyone has ever actually paid taxes on medals, because athletes aren’t idiots, and neither are their accountants, and neither are IRS enforcement agents. The lack of any obvious victims suggests that Messrs. Rubio and Farenthold may be doing what alert Republican lawmakers do in an election year; namely, aligning themselves with something unassailably American (Olympic medalists!) in the name of prying another shingle off the tax code. In this case, there hardly seems to be any great harm in doing so. We discourage the things we tax, so let it be said that no one should decline to invest decades of his life into pursuing Olympic medals for fear that Uncle Sam will take his wet bite of the spoils at day’s end.