The original story appeared on Barron’s on March. 1st, 2014.
U.S. Olympic medalists coming home confronted a reality chillier than the slushy slopes of Sochi: the tax man. Winners must pay taxes both on their hard-earned medals and on the little-known and, globally speaking, chintzy cash rewards that go with them.
Who knew? The U.S. Olympic Committee rewards U.S. winners $10,000 for a bronze medal, $15,000 for a silver, and $25,000 for a gold. A gold medalist who falls into the highest tax bracket would have to shell out $9,900 to the Internal Revenue Service in federal taxes alone.
Then there are the medals themselves. Based on recent commodity prices, a gold medal (which is actually mainly gold-plated silver) is worth about $550, which adds a couple of hundred dollars to the bill.
Not surprisingly, the Olympic tax has drawn criticism. “Taken together—the tax on Olympic athletes and the tax on income earned abroad—it can be said the U.S. officially earned the gold for having one of the most backward and illogical tax codes in the world,” says Justin Sykes, an analyst with Americans for Tax Reform. Texas Republican Rep. Blake Farenthold has revived a bill exempting U.S. medalists from the taxes. A similar bill in 2012 never came to a vote.
To add insult to injury, the American prize money is dwarfed by what athletes from some other countries get. Azerbaijan, for instance, boasts the biggest bonus, at over a half-million bucks for gold. Of course, Azerbaijan only sent four athletes to Sochi, and they brought home no medals. So much for incentives.