The cash prizes that Olympic athletes receive became the subject in increased attention after the story broke that US athletes may have to pay up to $8,936 for winning a gold medal (covered in a previous blog post here). Republicans, Democrats, and journalists are publicly outraged that US medal winners are “punished” for their athletic success. Never mind that the nearly $9,000 tax bill is based on the assumption that athletes are in the highest tax bracket and that they do not deduct any of their Olympic training costs. More importantly, and what most of the politicians and the news coverage miss, however, is that these athletes aren’t really punished at all. Winning athletes are rewarded by the US Olympic Committee ($25,000 for winning a Gold medal) and then that prize is taxed. Overall, US Olympic athletes are richer after receiving the prize money, not to mention the economic benefits of the resulting endorsements. Claiming that athletes are punished for winning a medal is analogous to arguing that lottery winners are punished for winning the lottery because they have to pay taxes on their winnings. If winning the lottery is a punishment, then why were so many millions of people paying to receive the punishment of having to pay taxes on a Megamillions jackpot of $640+ million back in April? The answer is that even though taxes reduce the award (or lottery winnings), the recipient is still better off for having won.
US Olympic Medal Winners aren’t Punished for Winning Gold
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