When I took Federal Income Tax in law school, the professor got up in front of the class and for his opening line started out by saying, “The Federal Income Tax Code is a Social Policy Document.” And indeed it is. Taxpayers receive breaks for a variety of reasons, from owning a house and paying for child care to raising race horses.
How about Olympic medals? I bet you didn’t know that they are taxed. That’s right. An Olympic gold winner is awarded a $25,000 cash bonus per medal by the Olympic committee, and is taxed roughly $9,900. Silver and bronze winners receive smaller cash bonuses ($15,000 and $10,000, respectively) and pay accordingly. Most states tax the recipient as well.
For someone who has carried the flag for his or her country, is this just? I draw a distinction between a Michael Phelps, who may or may not live on Wheaties, and an archery winner, who may be living in his parents’ garage. Just a thought, but it would seem to me that if you gross under $50,000 a year, the medal should be tax-free. Indeed, the U.S. Senate recently passed a bill to exclude Olympians’ and Paralympians’ winnings from their gross income. The House has yet to vote on a similar bill.