Obama Supports Exempting Olympic Awards From Taxes, Agreeing With Republicans

White House press secretary Jay Carney told reporters on Monday that the president believes that awards and medals won by Olympic athletes should be exempt from income taxes, a move that implies he would support recently proposed legislation by U.S. Sen. Marco Rubio, R-Fla., that would exempt athletes' winnings.

Olympians are currently awarded $25,000 for a gold medal, $15,000 for a silver and $10,000 for a bronze.

Carney said Obama would sign the Rubio-sponsored legislation -- which has also been publicly supported by Obama's Republican presidential rival Mitt Romney -- if it made it to his desk.

"The president believes that we should support efforts...to ensure that we are doing everything we can to honor and support our Olympic athletes who have volunteered to represent our nation at the Olympic Games," Carney said, according to The Hill.

Rubio introduced the legislation in response to an analysis by Grover Norquist's anti-tax organization Americans for Tax Reform (ATR), which concluded gold medal winners would owe almost $9,000 to the Internal Revenue Service when they return home from the London games.  However, those estimates are exaggerated, according to Politifact, which points out the ATR analysis made those calculations using the 35 top marginal tax rate, which only kicks in on income earned after reaching a threshold of about $380,000.

"While some world-class athletes come into the Olympics as international superstars with lucrative endorsement deals, many athletes earn less," Politifact reports, noting that one study conducted by the Track & Field Association found that about half of the top-ranking U.S. track and field athletes in their event made less than $15,000 annually from the sport in sponsorship, grants and prize money.

The fact-checking website also notes that Olympic athletes are not subject to "extra" taxes levied on their prize money, as they are the same taxes laid on any income, whether it be from wages or lottery winnings.

The medals themselves - which actually have a monetary value of about  $675 (gold), $385 (silver) and under $5 (bronze) are not subject to taxation, Mark Jones, the communications director for the U.S. Olympic Committee, recently told Salon.

As accountant K. Sean Packard points out in the blog TaxTV, Rubio's legislation contains a loophole that could allow athletes with huge endorsements to potentially claim hundreds of thousands of dollars' worth of tax breaks. Packard, who specializes in advising and preparing returns for athletes, writes that "any agent worth his/her salt" would ensure that athletes' endorsement contracts -- which typically contain huge bonuses for Olympic medal wins -- would be included in exemptions for "any prize or award won by the taxpayer in athletic competition in the Olympic games."

--