Americans for Tax Reform’s Hugh Johnson deserves the gold for the press coverage he’s gotten for his Olympics medals post.
Johnson noted that athletes must pay regular income taxes on the cash that comes with their prizes — up to $25,000 — as well as on the precious metal itself, worth up to $675.
Johnson further notes that athletes must pay taxes on this income even though they earned it in a foreign country, putting them “at a competitive disadvantage that has nothing to do with sports.”
We’re all apparently supposed to be outraged by this information and use it as a call to action to our elected representatives for some sort of tax reform. Florida senator Marco Rubio earns the media silver here. He’s taken up the cause, introduced a bill to fix the problem, and garnered lots of good press of his own this week.
On the merits, though, this one is a last-place loser.
Elite sport is a business, and can be a lucrative one. The wealthiest Americans — including top Olympic athletes — earn their money in all sorts of weird ways rather than working at a boring old payroll job. They pay taxes on that income just like the rest of us do.
And why shouldn’t they?
It would not be very conservative for the government to determine what kind of income-producing behavior it prefers and to tax that behavior favorably.
Why should Michael Phelps get a free pass on his medals but a doctor who performs live-saving heart surgeries have to pay full income taxes on the money he makes from that endeavor?
I like baseball, but not football; I’d rather Jeter pay lower taxes than Tebow.
The worldwide income argument doesn’t make much sense in this context, either.
Yes, it’s a fair enough point — although hardly the country’s most pressing tax problem — that an American who has lived for decades in, say, Peru has to renounce her citizenship in order to avoid paying American taxes on her income, all of it earned and spent in Peru.
But it doesn’t make a lot of sense to say that American athletes who live in America and are competing under the American flag should avoid paying taxes on income earned in this pursuit.
NBC sportscaster Bob Costas and other people working for American companies on what for them, as for the athletes, is a short overseas assignment are also getting paid, and will also presumably pay American taxes. Should they pay their taxes to Britain instead, or just not pay them at all?
Rubio should find a better tax cause. The mortgage-interest deduction, maybe?
— Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.