Uncle Sam has never trained for a sport and has never competed in the Olympics but wins every time Americans cross the finish line. That’s because the federal government considers gold, silver, and bronze medals and cash prizes as income and levies taxes accordingly.
Olympians who win gold receive $25,000. Silver medalists get $15,000 and bronze winners have to settle for $10,000. The United States Olympic Committee pays the athletes, reports USA Today. So, in the case of Michael Phelps, who took home five gold medals and one silver in Rio, he will hand over nearly $55,000 to Uncle Sam. That’s not a huge dent for someone worth $55 million, but Uncle Sam gets his for doing nothing.
The medals themselves are taxed, too, based on commodity prices of precious metals. The report notes $600 for gold, $300 for silver, and bronze is “next to nothing.” If the athletes were to sell their medals on the open market, they could easily demand $10,000 or more.
According to USA Today, there are differences between athletes in higher tax brackets than those in lower brackets:
The maximum possible "victory tax" on the bonus for each gold medal, using the top tax rate of 39.6% for the nation's highest earners, is $9,900, according to Americans for Tax Reform. For silver, it's $5,940, and for bronze it's $3,960. Athletes in lower tax brackets would owe less — and keep in mind that some or all of their massive training expenses would likely be deductible, whether they treat their sport as a business or a hobby.
Politicians on both sides of the aisle have attempted to pass legislation that would stop these taxes, but so far none have succeeded. Sen. Marco Rubio tried in 2012, arguing that Olympians shouldn’t be punished for their athletic excellence. And this year, Sens. John Thune (R-SD) and Chuck Schumer (D-NY) sponsored a bill in hopes to eliminate the taxes. It recently passed in the Senate. Schumer said in a statement:
Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank, when they earn a medal.