Who knew U.S. Olympic medalists rack up prize money along with their victories, and that those modest winnings are taxable? Sen. Marco Rubio (R-Florida) for one, and he wants Congress to call off the IRS.
His Olympic Tax Elimination Act would make the prize money from the U.S. Olympic Committee — $25,000 for gold, $15,000 for silver and $10,000 for bronze — exempt from federal income taxes. The proposal has a gut level appeal; who wouldn’t want to give the country’s champions a break?
But it’s a bad idea.
The 73,000 page federal income tax code is a 3.8 million word abomination of hair-pulling complexity largely because of the $1.1 trillion in deductions, credits and loopholes Congress has stuffed into it over the years. What’s needed is sweeping tax reform that would eliminate almost all of them in exchange for lower tax rates across the board. Simplicity should be the watchword.
Until that happens, any tax preparer worth the title should be able to cobble together enough deductions for unreimbursed expenses, such as travel to competitions, equipment and pay for coaches, to virtually erase the tax liability for Olympians.
But give Rubio the gold for political opportunism.
Pictured above: Kayla Harrison of the United States bites on her gold medal after winning the women's 78-kg judo competition at the 2012 Summer Olympics. (Aug. 2, 2012)