AUGUSTA, Maine — Maine’s congressional delegation burns with the Olympic spirit, at least when it comes to legislation that would exempt U.S. athletes who win Olympic medals from paying federal income tax on bonuses they receive for their accomplishments.
The U.S Olympic Committee pays an honorarium to U.S. athletes who win medals. A gold is worth a $25,000 bonus, $15,000 for silver and $10,000 for bronze. The committee accepts no government funding. Instead, it relies on private and corporate donations, as well as endowment funds from the U.S. Olympic Foundation, which was created with the profits from the 1984 Los Angeles Olympics.
Amid media reports about financial woes experienced by the families of gold-medal winning gymnast Gabby Douglas and gold-medal winning swimmer Ryan Lochte, an IRS policy that taxes the bonuses as income became the playing field for political gamesmanship.
On Aug. 1, Republicans introduced versions of the Olympic Tax Exemption Act in both the U.S. House and U.S. Senate. Republican Sen. Marco Rubio of Florida, frequently mentioned as a possible running mate for presumptive GOP presidential nominee Mitt Romney, submitted the Senate legislation as S. 3471.
On the same day, Rep. Aaron Schock , R-Ill., introduced the measure as HR 6267. Within 24 hours, the House bill had gained 33 co-sponsors, including Rep. Ron Paul of Texas, another Republican presidential candidate.
The legislation would apply to medals won after Dec. 31, 2011, meaning that the only Mainer affected would be rower Elle Logan of Boothbay Harbor, a member of the eight-women crew team that won a gold medal in London.
Maine’s congressional delegation weighed in on the measure Tuesday. All expressed support for U.S. Olympians and for legislation that would exempt them from paying income tax on the medal bonuses. Some also took the opportunity to promote tax reform agendas.
First out of the blocks was 1st District U.S. Rep.Chellie Pingree who issued a release stating that she will co-sponsor the legislation.
“Many of these athletes have struggled and sacrificed for years as amateurs and very few of them are raking in big endorsement fees,” Pingree said in the release. “These athletes are a great source of pride for the U.S., and I think the least we can do is give them a little bit of a tax break on what they get when they win a medal.”
After being contacted by the Bangor Daily News, Ed Gilman, a spokesman for Rep. Mike Michaud, a Democrat who represents Maine’s 2nd District, said Michaud has joined the list of House co-sponsors.
“He thinks all options should be on the table as Congress moves forward on tax reform,” Gilman said. “In addition to Olympians, thousands of middle class families in Maine need to have their tax cuts extended.”
Maine’s two U.S. senators also expressed support for the measure.
“The Americans who earn a medal and reach the zenith of sport reserved only for the world’s finest athletes truly embody the highest ideals of the Olympic Games,” Sen. Olympia Snowe, who is traveling in Europe, said in a statement. “An honorarium recognizing that unparalleled commitment to excellence certainly should not be taxed. I strongly support legislation to eliminate this unnecessary burden on our nation’s Olympians … and it is my hope that Congress can swiftly pass this bill and send it to the president’s desk.”
While supporting the tax exemption, Sen. Susan Collins took the opportunity to push for broader tax reform.
“While Sen. Collins is proud of our U.S. Olympic athletes and would support this effort, she strongly feels Congress needs to undertake comprehensive tax reform to make our system fairer, simpler, and more pro-growth for all Americans,” her spokesman, Kevin Kelley, wrote in an email to the Bangor Daily News.
The Olympics, it seems, represents one of the few places where Ron Paul and Chellie Pingree — not to mention Barack Obama and Mitt Romney — take the same side.
Jay Carney, President Obama’s press secretary, said Monday that Obama would sign the Olympic medal tax exemption if it reached his desk.
Romney, who played a lead role in organizing the 2002 Winter Games in Salt Lake City, last week advocated for the exemption.
However, the Olympic flame couldn’t completely outshine political competition. Jon Courtney, Pingree’s Republican opponent in the November general election, observed what he characterized as a change in Pingree’s position on taxes.
“I would like to commend Rep. Pingree in co-sponsoring exempting athletes from tax on their winnings in the Olympics,” Courtney wrote in an email. “Like many I was surprised that she would advocate for tax breaks for wealthy athletes like Michael Phelps. This policy is in stark contrast to the rhetoric of increasing taxes on the wealthy. I am encouraged by the apparent progress and I look forward to creating a culture of government that embraces growth and job creators so we can create more opportunity for all.”
I’m torn – why are they any different than the rest of us? That said, it’s mostly symbolic as the tax revenue from that money isn’t a speck on a drop in the ocean of our tax revenue.
RedPoint86 they are not any different than the rest of us, nor do they believe as such. Don’t think for a moment that our Olympic stars sacrificed and worked so hard because they wanted a tax break. They are being sucked into a black hole by politicians like Pingree who know how to use our tax system as leverage to favor their political career. Neither party wants a fair and simple tax system because that would prevent them from using it as leverage for self promotion. I feel bad that our politicians who should be at work trying to fix our broken economic system are instead on vacation and casting their dark evil shadow over the success of our shining olympic stars.
This is a bi-partisan initiative. Don’t lay it on one party vs. another. They’re ALL looking for that feel-good moment in the voting booth.
My income tax isn’t a speck in the ocean. How about me?
Nope, no exemptions for you. You have to pay to play.
Darn!! :)
Your next Olympic gold will be tax free. :-)
Yup, that’s my problem with it too. It’s also not like they’ve contributed something – I can see giving a tax break to someone who cured cancer, but a meathead….not as much.
If Olympic athletes were still amateurs rather than professional athletes I’d be more inclined to support an exemption but the vast majority of them are professionals now and I see no reason to exempt a portion of their income for doing a good job. My bonus is taxable, theirs should be as well.
This is true – if lebron wins gold, he can pay the tax!
But they are taxed for their professional work. Are they paid by those employers to go to the Olympics? Then that money should of course be taxed. I doubt the goal of any Olympian is to win a medal for the money associated with it. It is being the best of the best that drives them from what I can tell.
But they are taxed for their professional work. Are they paid by those employers to go to the Olympics? Then that money should of course be taxed. I doubt the goal of any Olympian is to win a medal for the money associated with it. It is being the best of the best that drives them from what I can tell.
Well, the way I see it is none of us should be paying income tax. It was unconstitutional until just under 100 years ago when we amended the Constitution to make it ok for the government to just keep on spending, and keep on taxing.
I dont understand your point. It was unconstitutional for women and African-American’s and 18-21 year olds to vote until we ammended the constitution. Should we go back to government revenue by custom’s duties only (19th century style) or remove taxes all together and no longer have a military?
This is the political bull manure that is typical of both parties. The democrats are rolling over like puppies and the republicans are again reneging on their commitment of no funding without concessions (guess that policy only comes into play when holding our country hostage).
And if anyone objects, they’ll be branded as unpatriotic…
It’s a tax on income…leave it be. Stop being gutless flag waving buffoons…will we now exempt every other athlete???? How about everyone else while we’re at it?????? It’s this kind of knee-jerk foolishness that leads to a busted tax code. Enough is enough.
We shouldn’t leave it be, we should get rid of all the personal income tax for everyone!
This is ridiculous . It is income just like all of the rest of us get and there should be no exemption.
This is ridiculous. We all “struggle” to do whatever it is that we do. I am a teacher, I had to “struggle” through college to get the job I have. Do I deserve a tax exemption? I do not think so. I understand that nobody knows who I am and apparently I am not “a great source of pride for the U.S.” I feel that it is the athletes’ “job” to go to the olympics and win medals and should have to pay the taxes on income. I am very proud of all of the athletes but they need to be taxed for their earnings.
You know, I felt like you do when I first read this. But then I thought about Franklin, a high school senior who took home multiple gold medals. She just might not have to take out student loans for her college education because of her bonuses. Michael Phelps…. I think he needs a good long vacation full of fun. I have no idea how those with Olympic dreams finance their training programs. Do some go into debt? For some coaches help them buy food if the story was true in one piece I saw. Let them have their day in the sun. They are young. They worked hard for many years to achieve Olympic glory. There is plenty of time to tax their incomes. The endorsement income will be taxed I have no doubt. They represented us very well and I do not begrudge them their tax-free bonuses. Kind of like the amount exempted in inheritance tax. And, we do not even have to work at anything to receive that.
I see what you’re saying, but there are kids across the country who work hard for money so that they could go to college but they’re taxed. There are adults across the country who work hard and they are still taxed. Their day in the sun is not necessarily based on the bonus they get from the USOC. The glory they get is from winning the gold, silver, or bronze.
Money-they’ll get plenty of it from endorsement contracts.
We all work hard in this country-I don’t think that the government should be saying that some Americans deserve to pay taxes for their hard work and others don’t.
But they are not working for money. They work to get to the Olympics which is an achievement in itself and they do not get paid for the work they do to get there, or do they? Winning a medal is of course the hope of every Olympian, but it is just that….. a hope. If the Olympic committee want to give a gift to those who perform the best to honor the spirit of the Olympics then I am okay with that. I think the choice of the word bonus is what set this whole outrage off. It is really a gift. And, not every medal winner will get endorsement contracts. Only the high profile ones. Then they will be employed and they will be taxed. And we benefit from that.
If you have to finish in the top three it is not a gift. It is given in return for performance. Tha certainly sounds similar to a bonus.
I see your point, but I just cannot see how winning a competition is the same as employment and so I have difficulty applying your logic to this outcome. If I as a sponsor of an event wish to reward an achievement then I am giving a gift to celebrate that achievement. And, if I decide to gift you $100,000 I the gifter have to pay the taxes. So if anyone is going to pay the taxes it needs to be the Olympic committee.
If they aren’t working for the money then Im sure they dont mind paying taxes on it like everyone else
Then people who inherit money should pay on every penny. They did not work for it. And people who are gifted money. They should pay taxes on it. It is income after all.
I don’t belive that I have ever defended a cut in the inheritance tax…..?
I was simply responding to your logic by applying it elsewhere.
I am sure Missy Franklin will have a scholarship to whatever school she is going to. She will not have to pay much or anything when it come to fees and tuition. Phelps does deserve a vacation, but I think he can afford a vacation after winning all of those medals and stil pay taxes on his bonuses. I am not doubting that these Olympians have worked hard for many years, but so do millions of Americans every year and our bonuses are taxed. I am very proud of our athletes and I am excited to see them succeed. However, I just do not feel that it is right to tax one person who worked hard to reach their goals and then not tax the Olympians because the worked hard have achieved their goals.
Well, I look at it as more of a gift from the Olympic committee. A couple can give a gift of up to $26,000 and not be taxed…. the receiver or the giver. But that certainly is income for the receiver. A work bonus is based on how much you add to your employer’s bottom line, right? It is above and beyond what you are paid in salary for the work you do. Olympians receive no salary for their ‘work’ that I am aware of. If they want to sell themselves to marketing agencies (a kind of prostitution in my mind, very lucrative prostitution), then they have an employer and that money needs to be taxed. Income tax (the kind you are talking about, not investment income or inheritance above the exempted amount) is based on employment. I pay no income tax if I am not employed.
Income tax is based on an income producing activity, it is not restricted to income from employment by a third party.
And on gifts, inheritance, interest, sole proprietors, self-employed. Yes. I think I said that.
A gift is someone given with without anything expected in return. The Olympic committee is making payment based on performance.
We will just have to agree to disagree. And, the Olympic committee expects nothing in return does it? We are paid to do work. That pay is taxed. They are paid nothing while they work. It is a prize, not pay.
Yup, guess we will :-). Not a big deal. As an accountant for 40 years a prize is also taxable. The Olympic Committee expects nothing other than finishing in the top three. Some Olympians get little but many get additional money from the Olympic committees and money from organizations connected with their sport. I think I saw a post from you (maybe someone else but too tired to look) that commented about endorsments also. There are endorsments plus there is money from being a commentator for ESPN other broadcasters & such. Not to take away from the fact that there are some athletes who receive nothing but the Olympic stipend but with expenses nothing should be owed in taxes in that case. What this feel good exemption does is give tax free money to many well off people. Time to stop fragmenting the tax code. Actually probably too late. Let the tax exemptions, credits, deductions etc continue. As a tax preparer I make more money but…I don’t know is there any hope for our tax code and down the road our country? Special deals for multiple reasons.
Yeah, I just learned that. All prizes are taxable. Bad choice of words. But gifts are not. Or, rather the gifter is taxed. I think that is the appropriate way to frame this. The Olympic Committee should be paying the taxes. It did raise questions for me about these athletes getting a salary while they train and compete. If that is the case, then they need to be taxed on that income. They are employed to compete for their ‘owner’. But in order for it to be an employment bonus it would have to be the employer giving the bonus. They are not ‘working’ for the Olympic Committee. And, it really cannot be called a prize because a prize it something you win. The medals are the prizes. Not the money. Well….. it has been an interesting intellectual exercise. I know very little about our tax laws, but I learned a little in thinking this through. But I am satisfied with gift as the most accurate description of what the OC is giving our athletes. And, if exemption is necessary to protect that gift because the OC will not pay the taxes then so be it.
These athletes are getting paid based on performance. That is why you get more for a gold than a silver and so on. And they are getting a bonus above and beyond what they get paid because they do not get paid at all. $25000 bonus for getting a gold
You say po-tah-to, I say po-tay-to. Let’s call the whole thing off.
With the fame and endorsements that are sure to come to these medal winners. A tax break is the last thing the Congress should be considering. They are all jumping on this band wagon for fear of appearing unpatroitic. I would agree with this tax break if Congress would add some pork to this bill and give all U.S. students interest free loans for college. Which is not going to happen.
The endorsements will be taxed and that will be money we would not have had if they had not medalled and most of those who did get a medal will not get endorsement contracts. The gift they will receive from the Olympic committee will not give them a new lifestyle. I do agree with you about student loans. We have interest free loans on cars…… why not education?
Face it. Most Olympians do not make all that much money in the first place, unless they are an NBA basketball star. Though they can be professionals, we Americans do not pay gymnasts, people who row or track athletes much, and do not provide ping pong tables for adults to play or practice on. It wasn’t until tennis courts became public access that we had black people become Olympians in such a sport.
Police tests had to remove a swimming requirement because not enough black people could access a swimming hole to learn how to swim.
Winning a gold medal will not increase their taxes too much, unless they are Michael Phelps winning over $100,000. If someone only makes $25,000 a year, their income tax is smaller than if they made $100,000 including the medal. Many could deduct their hobby expenses anyway from their winnings, through itemized deductions.
Now if the multi winning Olympian does not save for a rainy day, and we all know how many people are spendthrifts, maybe they should pay higher taxes so when they like others who spent themselves to the poor house would have given to a system they would end up taking from or owing.
If they save for a rainy day or retirement that is a different matter, or spend to save a home etc.
Bronze medalists hardly have any taxes if at all, unless they make a lot of money too, but these are not normally rich people.
Olympians have to achieve many medals to make a enough of a living off of medals, but let’s face it, not enough to survive until the next Olympics on their sport alone, and they will not be penalized harshly for their winnings.
I think someone is trying to get specific votes in an election year.
I am not against changing tax rules for athletes. In Maine one cannot live as a professional athlete. There is not enough winnings. Why punish them with taxes, especially on a measly couple hundred dollars, if that? Shouldn’t they be rewarded for a healthy living style?
A person who takes a standard deduction and is an athlete who wins anything has to pay higher taxes than a couch potato who will more likely develop obesity, diabetes, heart failure etc. And more likely use more of the health system than an athlete. Is that fair?
Also, a person needs to make enough money in order to itemize deductions and have enough expenses. So we are talking about the middle class/lower middle class athlete who is taxed more than a couch potato.
Why limit exemptions to Olympians?
Actually most Olympic athlete’s income is reported on form 1099MISC and would be filed on Schedule C of their tax return and their expenses taken there not as an itemized deduction.
Robert Long – Your article is missing two very important points. First, this whole Olympic medal taxation issue was whipped up by right-wing anti-tax nutjob Grover Norquist and his Americans for Tax Reform goon squad as a diversion from the assault on Mitt Romney’s refusal to release his tax returns. Second, please interview a certified public accountant or other tax expert who can explain how unlikely it is that any Olympic medal winner will actually be on the hook for a tax bill that they can’t afford. You don’t have to dig too deep into the tax code to figure out that most of the athletes who aren’t millionaires will have plenty of expenses to claim against their winnings in order to minimize their tax liability.
Courtney = “trickle down” = ridiculous. Athletes should pay taxes like everybody else. Gold medals = endorsements.
How about a tax exemption for all the families of soldiers killed or wounded in combat. At the same time we could tax any Corp. a higher rate specific to profit from war related sales and use that to offset the families exemption.
I have no issue with the athletes being exempted or if they get taxed. The bigger question in my mind is why did Congress wait until NOW, as the regularly scheduled Olympic and ELECTION seasons are upon us, to bring up the idea? Chane for press attention? Photo ops with famous young athletes? If this were an ACTUAL issue, they could have brought it up LAST year, when there was no time constraint (and it would have gotten WAY less press-play!)
Yeah! They’re bumping the daily gay articles off the radar!! :oP
Tax breaks are why we are broke. Tax an athlete. Higher a teacher.
How about exempting military pay instead?
If one is enlisted or a warrent officer all of your monthy income is excluded from federal income for any part of a month they serve in a combat zone. There is a partial exclusion for commissioned officers.
Persons who served in the Military cannot even get an exemption from their pensions in this State! I respect and honor the Olympians, but come on!
Someone willing to lay down their lives in defense of their country is a little more deserving than someone who is really good at ping pong.
Well, it’s more than pingpong, but otherwise I agree.
MAYBE SOMEONE WILL OFFER AN AMENDMENT THAT TREATS EVERY INDIVIDUAL, WHO WORKS HARD AND RECEIVES A BONUS, EQUALLY.
Maine’s Seth Wescott was cited for not filing and paying taxes and it wasn’t a small amount. He is certainly making more than the stipend for winning a medal.
Can you say GRANDSTANDING?
This is a classic example of how our politics are broken. Lets call this the distraction issue of the day. This is the only business our Congress can readily carry out nowadays.
For those who believe this is a real issue, you are missing the rest of the story. Prior to this flurry of congressional activity, athletes could deduct from their income any and all expenses that were incurred to get them to the podium. This includes training, travel, etc. For most Olympians, this is a large sum of money spent each year in preparation. These expenses nearly always reduce the taxable portion of the honorarium to zero, therefor this is really a non-issue.
The big picture here is that this hyped story is an opportunity to spread misleading information to make people think that taxes are unfair in general and that they punish success more specifically. This reinforces a popular narrative that is being disseminated to permit the wealthy to avoid paying their fair share.
The legs this story got almost overnight shows the extent to which the popular media we rely on for information and news has been co-opted by the wealthy to spread their message at the exclusion of the real issue of the day: corporations are in control of our government and are destroying the lives of tens of millions of families in their mission to reduce wages for us and reduce taxes for them. Everything we hear and read is a distraction from that harsh reality. They believe if they do not print it, we will not know it is happening. They take us for fools and we need to let them know better.
But, Why not? It’s a once in a lifetime opportunity to represent and everyone should be included.
I defended this country for 24 years and have to pay taxes? They get a pass because they won a medal? I was decorated several times where’s my tax break?
DOH, as a famous guy once or twice said, pols, read the polls. “Honorariums” should be taxed.
These are professional athletes and they no going into this that there is a liability and they should pay all taxes that come with the event. It makes no difference if they earning in th olympics or on the court. If you exempt anyone maybe you should exempt the military.
If I won 25000 dollars in the lottery it would be taxed….I work hard all year at my job and that gets taxed…..Aren’t we being told we are broke?
Just sayn’
Faux election-year “patriotism” is no way to set tax policy.
They should pay their taxes the same as the rest of us do, or should I say some us do, it appears Mitt Romney does not feel he has an obligation to pay any taxes.
What are you talking about? Olympians shouldn’t pay tax at all. We’ve produced this fun rap videos that highlight why Olympians are the best ever: http://bit.ly/olmVd