Winning Gold in Rio Could Cost You
By Jenna Goff
Washington Week Fellow
American athletes get more than gold, silver or bronze when they win an Olympic medal: they also score some green. The U.S. Olympic Committee awards hefty cash prizes to all medalists. But this money comes with a cost that many have found controversial, as the IRS can tax Olympic medal earnings at rates up to 39 percent. We look at how much Olympians actually make and what's being done to fight the tax.
How much do American Olympic medalists earn?
All American Olympic medalists come home to prize money from the U.S. Olympic Committee. Gold medalists rake in $25,000, silver medalists get $15,000, and bronze winners earn $10,000. This is on top of the actual value of a medal itself. The scrap value of a gold medal -- a mixture of one percent 24-karat gold, six percent copper, and 93 percent silver -- is about $650. The cost of a silver medal -- 93 percent silver and sevent percent copper -- is around $335. And bronze metals -- made almost entirely of copper -- are worth less than $5.
How much do other countries pay their Olympic medalists?
It's not uncommon for countries to reward their Olympic athletes. This year, Indian gold medalists will win 10 million rupees, or about $150,000. After the 2012 London Olympics, Russia paid $12.7 million in medal payouts to its athletes. China has previously doled out cash, luxury cars, and even new homes. Other countries, like Great Britain, give their athletes nothing but glory.
What taxes apply to American medals?
Here's the controversial part: the IRS considers medal earnings as earned income abroad and taxes it as such, up to 39 percent. An American gold medalist could face a tax up to $9,900 per medal, while silver and bronze winners would have to pay up to $5,940 and $3,960, respectively. After Team USA won 104 medals (46 gold, 29 silver and 29 bronze) in the 2012 London Olympic Games, the IRS could have collected as much as $742,500 in taxes. But this is the maximum amount; the taxing is based on an individual Olympian's tax circumstances and available deductions.
What’s been done in the past to combat this tax?
Some members of Congress are not impressed by the tax on medals. In the midst of the 2012 Olympics, Sen. Marco Rubio, R-Fla., and then-Rep. Aaron Schock, R-Ill., introduced The Olympic Tax Elimination Act that would amend the 1986 Internal Revenue Code to make Olympians exempt from paying taxes on their medals. President Obama pledged that if the bill reached his desk, he would sign it. But it didn't; the act never even came to a vote.
The issue was brought up again at the 2014 Sochi Winter Olympics, when Rep. Blake Farenthold, R-Texas, introduced the Tax Exemptions for American Medalists (TEAM) Act. This act made it a bit further, as it was referred to the Committee on Ways and Means, but it soon died in Congress.
Most recently, on the brink of the 2016 Rio Summer Olympics, Sens. Chuck Schumer, D-N.Y., and John Thune, R-S.D., proposed the United States Appreciation for Olympians and Paralympians Act. It has the same goal as the previous acts: to amend the 1986 Internal Revenue Act to exclude tax on hard-earned Olympic medals. It unanimously passed the Senate on July 12 and now waits consideration from the House when it returns on September 6.