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California Assembly Member Wants to Stop Taxing Olympians for Winning

Athletes who get gold, silver, or bronze fork over thousands to the IRS and state treasury.

Scene from the 2012 London Olympics: Does that say "run" or "ruin"? 

 

The athletes who will represent the United States in at the Olympics and Paralympics in Rio de Janeiro are volunteers. They can spend tens of thousands of dollars per year to get to the Olympics, and maybe just earn a few grand per year after expenses, if they’re lucky. They only get paid for competing in the Olympics if they win. And if they do win? The prize money—typically $25,000 for gold, $15,000 for silver, and $10,000 for bronze—and the value of the medals themselves become, in IRS parlance, earned income abroad. Which is code for “Please make your check payable to the IRS.”

State Assembly member Brian Jones, who represents parts of Southern California including San Diego County, wants California to stop collecting state taxes on that money. According to data his office compiled, some 2012 bronze medalists forked over $3,500, some silver medalists handed over $5,385, and some gold medalists paid $8,986 in federal and state taxes combined. 

Jones spokesperson Taylor Melody isn’t sure how much those burdens—which are based on the 35 percent tax bracket—would fall if only the California portion of the tax were eliminated. But that may not matter: This summer Senator Chuck Schumer of New York sponsored a similar bill that would put a stop to the “victory tax” levied by the IRS. That bill passed in the Senate but hasn’t gotten through the House yet.

California’s bill, which has already cleared the Assembly, could go before the State Senate for a vote next week. If it passes, it will apply to the tax year that began in January 2016 and will expire on January 1, 2021 (a typical sunset period for a tax measure).

It’s a pretty small gesture, but likely an important one for athletes who, while they’re at the top of their game, are also at the bottom of the financial food chain. Case in point: Team USA javelin thrower Cyrus Hostetler, who in his best year earned just $3,000, after expenses. As he told the Washington Post, “The athletes are the very bottom of a trickle-down system, and there’s just not much left for us.”

 

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