Sen. Marco Rubio, R-Fla., introduced a bill today in the Senate that would exempt U.S. Olympic medal winners from paying federal taxes on their medals and prize money earned in the Olympics.
"Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness," Rubio said in a paper statement today announcing his legislation. "Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back home."
Under U.S. tax law, the athletes must add the value of their Olympic medals and prizes to their taxable income, and are taxed at a rate of 35% by the IRS.
Americans for Tax Reform found that the value of a gold medal is about $675, meaning that an athlete could be on the hook for a $236 extra tax burden.
In addition, and more financially significant, Olympians who win medals also receive cash payments - $25,000 for gold, $15,000 for silver and $10,000 for bronze. This taxable income could mean that a Gold Medal winner could face a tax on the cash prize, in addition to the amount from the tax on their medal, at $8,750, according to the Americans for Tax Reform.
Rubio said athletes should not be 'punished" by their athletic achievement.
"We need a fundamental overhaul of our tax code, but we shouldn't wait any time we have a chance to aggressively fix ridiculous tax laws like this tax on Olympians' medals and prize money," Rubio said. "We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."
Rubio's bill, if taken up and passed in Congress, would apply to awards won after Dec. 31, 2011.
The bill would amend the Internal Revenue Code of 1986 to eliminate the tax on Olympic medals and prize money won by U.S. athletes. If enacted into law, the gross income of Olympic athletes "shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games."