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No taxes on Olympic medals, outraged U.S. lawmakers demand

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WASHINGTON -- Getting into the Olympic spirit, lawmakers have introduced legislation to exempt U.S. medal winners from paying taxes on their “hard-earned medals.”

“Only the U.S. tax code can turn the ‘thrill of victory’ into the agony of victory,” Reps. Mary Bono Mack (R-Palm Springs) and G.K. Butterfield (D-N.C.), sponsors of a bill to eliminate the tax, said in a statement.

Olympians who win medals receive $25,000 for gold, $15,000 for silver and $10,000 for bronze from the U.S. Olympic Committee.

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A gold medal winner will pay the IRS up to $8,986, according to Americans for Tax Reform Foundation, whose analysis caught lawmakers’ attention. Silver medal winners face a tax of up to $5,385, and bronze medal winners face a tax of up to $3,502, the group says.

But the group’s calculations have generated controversy of their own.

PolitiFact, a fact-checking project of the Tampa Bay Times, noted on its website that athletes can deduct un-reimbursed expenses. “Any accountant worth their salt should be able to get the rate of tax on medal winnings much below $9,000, and maybe even to zero,’’ it said.

Americans for Tax Reform responded that its primary claim stands up, that is: The prizes are taxable.

And so Sen. Marco Rubio (R-Fla.) introduced the Olympic Tax Elimination Act.

“Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it,’’ he said.

Ken Johnson, an aide to Bono Mack, added: “For every Michael Phelps, there are hundreds of other U.S. athletes who don’t ‘cash in’ on their fame. This is more about the teenage gymnast who comes home with a $10,000 tax bill, but can’t write off the cost of a personal trainer…. It’s a simple – and pretty inexpensive way – to say ‘thank you’ for their hard work and sacrifices.”

But Matthew Gardner at Citizens for Tax Justice, also questioning the anti-tax group’s claims about the potential tax liability medal winners could face, said the legislation would “add to the complexity and loopholes that everyone agrees are a problem.”

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“Our revenues are dwindling, the rich pay less and less in taxes every year and the tax code needs reform yesterday,” he said. “With this kind of opportunistic legislation, these lawmakers are part of the problem, not the solution.”

Given the gridlock in Congress, this bill might require legislative gymnastics worthy of a gold medalist to advance.

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richard.simon@latimes.com

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