Winning a medal at the Olympics is a comparable culmination of professional achievement for athletes, an elevation of athletes from high-performing people to bona fide national heroes.
From becoming household names to finding their likenesses on cereal boxes, Gatorade bottles, and Nike commercials, Olympic medalists see a chain of events following their victories that not only make a career but serve as a testament to their tremendous physical achievements.
However, it’s not all sunshine and rainbows and Wheaties endorsements; in America, with great Olympic winnings come great (fiscal) responsibilities, and the highest-placing athletes return home from the competition of their lives with glory, esteem, and a newly cemented place in some of the nation’s highest tax brackets.
Taxation after Olympic Representation
Athletes who place in the Olympic games are offered certain bonuses depending on the caliber of their performances: $25,000 for gold, $15,000 for silver, and $10,000 for bronze medals.
The medals themselves also have monetary value: gold (comprised primarily of silver which is then plated with gold) is worth about $500, silver is worth about $300, and bronze (mostly made of copper and other mixed low-value medals) is about $4, an amount of nominal that it holds no taxable value. Currently, the United States taxes athletes on their Olympic bonuses as well as on the values of their medals themselves.
Athletes who place highly, generate massive attention on social media, or become household names throughout Olympic games also tend to accrue lucrative endorsement deals following their tours. For example, Simone Biles, a multiple gold medalist at the Rio 2016 games, went on to secure major endorsement deals with brands like Nike, Hershey’s and Kellogg’s, bringing her already substantial net worth up into a whole different tax bracket. The same, of course, can be said for record-breaking medalist Michael Phelps, whose performances in Beijing (2008), London (2012), and Rio (2016) has accrued his various endorsement deals with such marketing giants as Kia, Nike, Visa, and Under Armour, among various others.
Athletes like Phelps and Biles, who earn millions of dollars in endorsement deals during and immediately after their Olympic tour, are placed in the highest tax bracket in the US. This means their earnings are subject to a 39.6% tax.
But Wait! There Are Taxes
While there isn’t much debate regarding taxation of the earnings made from athletes’ endorsement deals with major brands, there is significant debate about the substantial taxes applied to their Olympic earnings themselves–particularly when over a third of these earnings are being charged.
Eliminating this taxation on Olympic earnings has been a bipartisan effort for a considerable amount of time. On a large scale, President Obama has worked towards the elimination of such a tax, and bipartisan votes have been cast almost unanimously to the same end.
In fact, this policy has come incredibly close to being overthrown very recently. Following the Rio 2016 games, the House of Representatives voted on a bill that would eliminate the tax on Olympic athletes’ winnings. The law was voted to be kept in place by–yes, you’re reading this correctly–one single vote.
The Debate Continues
Representative Jim Himes, a Democrat from Connecticut, stood quite literally alone in his vote to uphold the tax, insisting that, despite the “feel-good” appeal of eliminating it, the funds could be put to better use combatting national crises than remaining in highly paid athletes’ pockets.
It was by no means a popular decision, and Himes even joked that he might be beefing up his security detail in the coming days.
Despite the facetious fallout, Himes’s dissenting vote set the ground for a more thorough legal conversation about the extent to which extraordinary accomplishments on behalf of the U.S. merited tax breaks. He pointed to Nobel Peace Prize winnings and funds given to Special Operations soldiers as compensation for American heroism that did not escape taxation.
Countries that have implemented tax exemption policies for their Olympic champions do so under the principle of compensating already underpaid athletes for years of strenuously hard work. In fact, proponents of increased financial allowances point to a general lack of federal sponsorship for Olympians as a major reason why these tax breaks should be allocated. Because even the top-performing American athletes must shoulder most, if not all, of the cost of their training, proponents argue that the least the federal government can do is exempt them from massive taxation following the highest possible achievement of their careers on behalf of the country.
The debate is a fervent one, and due to the cyclical nature of the Olympics, it is one that is touched upon at least once every two years. While legally sound arguments are made on either side, there is no question that Olympic medals are the embodiment of extraordinary athletic performance to the point of endowing winners with an implicit “hero” status. It seems as though, for the time being, heroism will continue to come at a literal price.
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