My point was that it’s not just the medal-winning athletes who need a break. Most Olympic athletes are not women’s gymnasts or multi-event swimmers; they don’t have large endorsement incomes. Olympic shotputters are probably working low-end jobs to have time for their training and eke by.
I know a local Olympic gymnast (men’s) worked as a personal trainer for years. It’s great that he could deduct his training expenses; he probably paid no taxes. But he had to pay those expenses from his personal trainer salary, in addition to his living expenses. He had a few endorsements, but I don’t think it was a lot. A few of the Olympic swimmers I knew from years back were better off, because their sport got more endorsements.
As mentioned previously, the Olympics only awards the medal itself. Any cash is from the USOC, or the sport’s organizing body (or sponsors, I guess). I’m not actually sure now why some of those wouldn’t be gifts, too.
Agreed, and there are some programs to help those athletes. I’m friends with a few Olympians and they scrimped and saved in order to participate in their sport, but they did get stipends and support from their governing bodies, the USOC, and various other programs. It could be more, but there are programs in place to help them train, travel, and compete.
For the people who agree with this tax break, would you also agree with the same tax break on the Nobel and/or the Pulitzer? Or do you agree with the way it is now, that this prize tax break is specific to Olympians?
The important difference IMO is that the bonus money (it’s not a prize) is given by a quasi-government organization to US citizens who are competing under the US flag as representatives of the country. That doesn’t have a clear analog to Nobels and Pulitzers.
I don’t really think that Nobel and Pulitzer prizes are in any way analogous to Olympic medals. But, I think they’re all things that we as a country should encourage, so I’d have no problem with them all being incentivized.
The rate of any of them being awarded is so tiny that it’s not going to have any effect whatsoever on the country’s tax revenues.
Until the tax code is simplified, one little exemption like this isn’t a big deal. And as complications go, this one is pretty straightforward and easy to parse. The tax code in the US has been a tool for punishment/reward/direction for many years and probably will for many more.
Oh, please. How many Nobel or Pulitzer prize winners are there every year? Olympic medals are only handed out every other year, and while Americans do end up with quite a lot of the medals, it’s not going to be enough to overwhelm the IRS.
At worst, it’ll be another obscure IRS form and maybe a 1040 line or subtotal somewhere. It’ll be super-obscure, and most tax preparers won’t ever encounter a situation where they’ll have to remember it. And it’s unlikely you’d want to trust tax software to catch it, if you happen to be a medal winner. This is hardly “enormous” weight on the tax code. Simplifying tax exemptions is a worthy goal, but this is trivial compared to the massive other annoyances we already deal with.
Are they going to pass a law that limits tax-free prize money to winners of Nobel Prizes, Pulitzer Prizes, or Olympic medals? What about those who win the Templeton Prize, Pritzker Prize or a Fields Medal? Or would the law allow winners of any cash award to avoid taxes on the prize amount? Because in that case, I can imagine that someone is going to use this as a way to pass money onto someone else tax-free.
It might be hard to understand the burden if you’re not dealing with tax issues on a regular basis. Maybe it would help to think of it like the old Simon game, where you have to repeat a sequence of colors/tones/buttons.
When you start off and have only three or four to repeat, it is trivially simple. You think “What’s the point of this game?” By ten or twenty, you’re starting to sweat. The number of people who can get up to a hundred is tiny.
It’s the same thing for tax professionals/tax software. One exception? Simple. Ten exceptions? No big deal. A hundred exceptions? We’ll find a way to get by. A thousand? A million? There is no single change that takes you from “functional tax system” to “broken nightmare” but you do approach it as you go to infinity.
The same argument can be made for each and every one of the non-overwhelming exemptions that overwhelm the tax code. I’m entirely unpersuaded by this argument.
If the tax code is incentivizing any sort of prize money, I’d rather it incentivize science over jumping good.
I think it’s worth noting that while Nobel and Pulitzer Prize winners may not get wealthy, they’re at least able to earn a living from doing the activities that earned them their awards. Olympic athletes are prohibited from earning money for their athletic activities in order to maintain their eligibility to compete. So think of any financial reward they receive for winning as retroactive wages for the work they put in to reaching that level. And consider the tax exemption a reasonable trade for the fact they’re getting paid years after they did the work.
The tax code represents the will of the people as interpreted by the imperfect lens of the Congress. It incentivizes all sorts of things that most folks might not vote for in isolation. IMO, it’s not helpful to criticize any particular tax break in isolation unless it is designed to reward something against the public interest.
We give tax breaks for home ownership, having children, going to school, gambling losses, charitable contributions, energy efficiency improvements, etc. I don’t see this tax break as objectionable in light of all those.