Olympic medalists should not pay taxes on reward income

Andrew Clark

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What do volleyball legends Misty May-Treanor and Kerri Walsh-Jennings, tennis duo Bob and Mike Bryan, and soccer star Alex Morgan have in common?

All won gold at the London Olympics and are Southern California natives.

Nearly 25 pecent of American Olympians reside in the Golden State, according to the Los Angeles Times.  Now, there is a measure being considered in Sacramento that would make medal earnings a tax exemption.

The measure in California is only a small step towards a privilege that should be extended to all medal winners nationwide.

Currently, when an Olympic athlete earns a medal, they receive an honorarium of as much as $25,000 for a gold medal, according to the LA Times.  State and federal law counts these honorariums as income and taxes them as part of income.  According to Assemblyman Allan Mansoor (R-Costa Mesa), one of the sponsors of the California bill, a Californian gold medalist would owe an estimated $1,450 in state taxes.

One of the other sponsors, Assemblyman Curt Hagman (R-Chino Hills) said, “California athletes represent a true dedication to success which must be properly recognized and rewarded rather than monetarily punished.” It seems only fitting that Assemblyman Hagman is one of the supporters of the bill since Morgan lives in his district.

The idea of making Olympic winnings tax-exempt is gaining  steam in Washington, too.

“Taxing the Olympic medals of U.S. athletes is like Scrooge putting a tax on Christmas presents,” said Representative Mary Bono Mack (R-CA) and G.K. Butterfield (R-NC) in a joint statement.

The federal legislation has stalled in the House of Representatives, though. California State Senator Christine Kehoe (D-San Diego) was the lone dissenting vote when the state measure was passed by the Senate Governance and Finance Committee. She echoed the sentiments of the committee staff analysis that said it was “the exact opposite of sound tax policy.”

Opponents of the bill say superstar athletes like basketball players Chris Paul of the Los Angeles Clippers and Kobe Bryant of the Los Angeles Lakers would benefit when they already have high salaries from their NBA contracts.

Shutting off the proverbial tap for many because of a tiny handful is problematic. Most of the Olympic athletes do not play in a professional league that pays well like the NBA or the NHL when hockey players participate in the Winter Olympics.

Some American Olympians resort to living overseas to continue their professional career because the pay Stateside is so lacking.  For example, most members of the American men’s volleyball team play in European professional leagues because there is not an equivalent that pays well here at home.

A second problem with the assertion that all athletes have high salaries is that their tax contributions do not add up to much given the population; 128 athletes out of 38 million people projects to 0.000337 percent of the population.

Let’s assume all 128 California Olympians took home a gold medal and faced the $1,450 tax.  The total net gain for the state would be $185,600 a year, not to mention the athletes’ other taxable earnings.  Small potatoes when one considers that California just enacted a budget to try to close a $15.7 billion deficit from a population just under 38 million.

Rather than worry about getting every last drop of tax revenue from athletes, the state legislature needs to solve the big issues like fixing the budget deficit or whether or not to continue with the California high-speed rail project.

We root for them through “the thrill of victory and the agony of defeat.” Rather than turn to them to pay more for all their hard work and hours of training and conditioning, reward their efforts by not taxing their medals.

 

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