August 6th, 2012
04:07 PM ET
(CNN) – When the U.S. Olympic team add to its medal count, it’s not just the fans and Olympians who celebrate. So does the IRS.
That’s because the U.S. Olympic Committee awards each medalist with a cash prize - $25,000 for gold, $15,000 for silver, and $10,000 for bronze - money that the U.S. government has always considered taxable income.
That could amount to a hefty tax bill for some Olympians, especially America’s most prominent stars who have already collected multiple medals in London. For example, Michael Phelps has earned four gold medals and two silvers, amounting to $130,000 in accompanying cash prizes. That translates to nearly $46,000 in taxes owed by Phelps, assuming his income is taxed at 35 percent – the highest income tax bracket.
Moreover, some individual athletic associations pay their athletes even more per medal, like USA Cycling which shells out $100,000 for a gold medal.
But the White House on Monday said President Obama favors a proposed bill that would keep Uncle Sam’s hands off Olympic earnings.
"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," White House Press Secretary Jay Carney told reporters.
Carney was specifically referencing legislation proposed by Florida Republican Sen. Marco Rubio that would exempt the cash awards associated with Olympic medals.
“We need a fundamental overhaul of our tax code, but we shouldn’t wait any time we have a chance to aggressively fix ridiculous tax laws like this tax on Olympians’ medals and prize money,” Rubio said in a statement announcing the so-called Olympic Tax Elimination Act. “We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it.”
The 1-page bill only references cash prizes associated with medal wins, not the corporate sponsorships that can be worth millions of dollars for USA’s most prominent Olympians.
It’s currently unclear when and if the proposal will be put to a vote. Congress just adjourned for its five-week August recess and cutting Olympians’ tax bill may not be a high priority come the fall.