So far in the Sochi Olympics, America is falling behind in the medal count. But, financially speaking, that might not be so bad for our proud Olympians. Unlike many of our competitors in the 2014 Winter Olympics, the United States taxes athletes on their success at the World Games. In fact, a gold medal performance in Sochi will cost an American athlete an IRS tax bill just short of ten thousand dollars.
Congratulations on your gold medal! Now where’s Uncle Sam’s money?
Because the United States taxes citizens on income they earn while abroad, the privilege of winning a spot on an Olympic podium will cost our Olympic heroes a hefty price tag. And, let’s face it: Nothing says “we’re proud of you” like asking for a little redistribution of wealth. In an effort to help illustrate the absurdity of America’s fascination with taxing the success of individuals, Americans for Tax Reform broke down the numbers.
Being named the world champion in Sochi earns an Olympian one $25,000 paycheck. Second place earns $15,000. And $10,000 is awarded to each bronze medal winner. When combined with the athlete’s yearly annual income, most (if not all) US Olympians will be paying 39.6 percent on their haul from Mother Russia. After all, Gold medalists will be the beneficiaries of speaking engagements, endorsements, and further income yielding opportunities, which will push those lucky men and women into the highest US tax bracket. (America: The land where success comes with an IRS sponsored price tag.)
That means our friendly neighborhood IRS collects $9,900 for every gold medal awarded to an American in the Winter Olympics. Heck, even the Russian athletes (who may be taxed because the games are occurring on their native soil) only face a top tax rate of 13 percent, according to the Swiss firm KPMG. And all those socialist European countries? Well, most of them elect not to tax income earned abroad, so their Olympians will enjoy a nice tax-free income while competing in Sochi, Russia.
Thankfully, as of yet, the IRS has not figured out how to directly tax the precious metals that make up the individual medals. (By the way, it turns out that gold medals are often made primarily from silver… How’s that for irony? At least that will bring down their tax liability when the IRS finally elects to tax the trophies from conquered events.)