The cost of Victory: Why are US athletes taxed on Olympic medal wins?
US medal-winning athletes at the Olympics have to pay tax on their prize money – something which is proving controversial in the US. But why are athletes from the US taxed when others are not?
The US is right up there in the medals table, and has produced some of the finest displays in the Olympics so far.
Michael Phelps has broken the record for most Olympic medals ever, and 16-year-old rising star Gabby Douglas has won the all-round gold in the gymnastics – the first African-American woman to do so.
So the US is feeling pretty proud of its athletes right now. But not everyone is happy to hear that their Olympic medal-winning athletes are being taxed on their medal prize money.
Athletes are effectively being punished for their success, argues Florida Senator Marco Rubio, a Republican, who introduced a bill earlier this week that would eliminate tax on Olympic medals and prize money.
“Athletes representing our nation overseas in the Olympics shouldn’t have to worry about an extra tax bill waiting for them back home,” said Rubio.
This, he said, is an example of the “madness” of the US tax system, which he called a “complicated and burdensome mess”.
The US Olympic Committee awards prize money to its medal winners – $25,000 (£16,000) for gold, $15,000 (£10,000) for silver, and $10,000 (£6,000) for bronze.
This money is considered taxable income by the US Internal Revenue Service (IRS).
According to the advocacy group Americans for Tax Reform (ATR), an athlete on the highest rate of tax (35%), could face a tax bill of $8,750 (£5,600).
The value of the medals themselves could be subject to tax too, according to the ATR – adding a further $236 (£150), $135 (£85), and $2 (£1.20) respectively for gold, silver and bronze.
The Olympic example highlights what they regard as the underlying problem of the US’ so-called “worldwide” tax model.
Under this system, earnings made by a US citizen abroad are liable for both local tax and US tax.
And around the world
How much for a gold medal at London 2012 Olympics:
Singapore – $800,000 (£515,000)
Kazakhstan – $250,000 (£160,000)
Kyrgyzstan – $200,000 (£130,000)
Uzbekistan – $150,000 (£95,000)
Russia – $135,000 (£90,000)
Tajikistan – $63,000 (£40,000)
US – $25,000 (£16,000)
Australia – $20,000 (£13,000) plus face on a stamp
UK – No money – but their face on a stamp
Read the full article on BBC News
Category: World News |