Do Olympic Medalists Owe up to $9,000 to the IRS?
|August 10, 2012||Posted by Jeffery J. Smith under News|
OK, So When is a Good Time to Raise Taxes?
Should we exempt some? Should we tax at all? Should we finally tap our common wealth? We trim, blend, and append three 2012 articles from: (1) Tampa Bay Times, Jly 31, on facts by Politifact; (2) Los Angeles Times, Aug 1, on taxes by D. Turner; and (3) Los Angeles Times, Aug 3, on timing by J. Healey.
by Politifact, by Dan Turner, and by Jon Healey
Do Olympic Medalists Owe Up to $9,000 to the IRS?
Grover Norquist and Marco Rubio have launched an effort to lighten the tax burden for American athletes who win medals. Sen. Marco Rubio, R-Fla., introduced the Olympic Tax Elimination Act, which would exempt U.S. Olympic medal winners from paying taxes on their medals.
Rubio’s news release said the U.S. tax code “is a complicated and burdensome mess that too often punishes success.” (A new Olympics tax exemption might make the tax code more complicated, but we digress.)
However, for most athletes, the payment will be less than $9k. An athlete who wins a medal bonus would be free to deduct any unreimbursed expenses from the bonus, lowering — or maybe even eliminating — their tax hit. That could be travel, uniforms, cell phone use, tumbling classes, payments to coaches, new equipment and maintenance.
A non-superstar athlete earning a typical $25,000 a year would pay about 15 percent on any gold medal winnings. That would be $3,851 — before accounting for any allowable expenses.
Americans for Tax Reform is correct that gold medalists’ winnings are taxable, and it provides some leeway by saying that U.S. winners could be taxed up to $9,000. Still, it’s not likely that anyone would pay that much per medal in taxes — even if the winner was fortunate enough to have annual income well over $380,000 and refused to deduct any business expenses on their winnings.
JJS: More critique of exempting Olympic gold.
Marco Rubio’s Goofy Olympic Tax Giveaway
Honorariums, even if they go to Olympic athletes, are regular income. All kinds of unnecessary exemptions have been carved into the tax code. If you’re going to argue for a new one, it should be justified by some social benefit.
For example, if you lower the capital gains tax, you could encourage investment, which could have economic benefits. What’s the economic or social gain from giving athletes a free ride? Rubio doesn’t even bother to mention one.
Successful Olympic athletes often (though of course not always) achieve a degree of fame that brings extra income from product endorsements, and anyway it’s very unlikely that any of them were driven to be the best in the world in their sport by the prospect of a $25,000 honorarium. Give Rubio a gold medal for pandering, but he’s stewing in the warm-up pool when it comes to tax policy.
JJS: A lot of people never met a tax they didn’t like.
OK, So When is a Good Time to Raise Taxes?
Rep. Collin Peterson (D-Minn.) gave the Hill this week: “We shouldn’t be raising taxes right now, with the economy where it is.” Yet on Jan. 1, Congress will almost certainly increase the taxes paid by every jobholder in America. That’s because it is set to allow the expiration of a payroll tax holiday that’s been in effect for two years. The rates paid by employees will rise from 4.2% to 6.2% on the first $110,000 earned. That increase, which will be felt in the first paycheck, will drain up to $2,200 from a worker’s pay next year.
Significantly, it falls on the first dollars earned, not the ones earned after the first $200,000 to $250,000 in adjusted gross income.
Supporters of the cut would argue that the economy is almost as weak today as it was when the holiday was first imposed, and they have a point. But it doesn’t seem to be achieving the desired effect — namely, a faster-growing economy. And I’m especially pleased to see Congress treat a temporary change in tax law as just that — temporary.
What’s wrong here is the “we shouldn’t be raising taxes right now” rhetoric has become a mantra among those who want to extend the entire, multitrillion-dollar package of Bush tax cuts.
Rhetoric aside, focus on what politicians really are trying to do, which is put more money in the hands of high-income Americans growth. That’s a debate worth having.
JJS: The notion that politicians have a right to take your money is, I think, a holdover from when most of us were peasants and believed in kings. Personally, I think government should keep it hands off the earnings of private people. How then would government fund itself? First, politicians would stop wasting so much money on war, corporate welfare, and other subsidies; then government would not need so much money. The money that it did need, from where would that come? From user fees and membership dues. Use a public utility, pay a fee. Want to belong to a community? Then pay dues, just like joining a church or environmental group or any other organization.
But all this talk of taxing private wealth overlooks the elephant in the room — the tremendous sums of public wealth. What’s public wealth? It’s all the spending society does for the land and resources it uses. That spending stream is a surplus because nobody applied any of their labor or capital to make land, oil, etc, so they don’t need to be rewarded. That immense stream is common wealth because as residents pay in land dues and get back “rent” dividends, they would in effect compensate each other for keeping each other off their private parcel of land, a part of the earth, to which we all have a common right.
So silence the taxists. Tell them to switch to fees and dues and switch from earned income to natural outgo. Geonomic policy may sound radical but even partial applications have worked wherever tried.
A sprinter and a nation’s majority dodge taxes