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Discussion in 'The OT' started by fluffybear, Aug 4, 2012.
From Fox News:
Not sure how I feel about this. Gabby Douglas, I can see that. LeBron James? No. But even for the athletes like Gabby, I'm more inclined for them not to have to pay tax on the medal value than not pay tax on the money they get.
The article is somewhat misleading as it makes it sound like the medal winners are taxed on the honorarium and then up to an additional $9,000 on the intrinsic value of the medal, which is not correct.
For example, assuming a 35% bracket, a gold medal winner would face a tax of $8,750 on the $25,000 honorarium itself and an additional tax of approximately $250 on the intrinsic value of the medal (they are very thinly gold-plated), which is relatively minimal, for a total of approximately $9,000.
The cash they get for the medal, depending on the athlete of course, is fairly minimal. According to some reports, Michael Phelps is worth up to $40 million with all his endorsement deals.
I bet though that Kayla Harrison who brought home the first Gold for the US in Judo, won't get lucrative deals like that. Of course Phelps has the number of medals going for him.
Thank you, a thinking voice in the maelstrom of hyperbole!
The disingenuous news would be equally (in)correct to say they would pay no tax on an income $25,000. Their legit deductions would drop most of them to an AGI of nearly zero.
My basic feeling is everyone should pay taxes on income. I am a flat tax proponent, by the way.
A point could made that the medal is not income until sold. Then it could be taxed. The trick there is sweepstakes winnings...
(Why isn't there a poll entry for honorarium only, by the way?)
Another thing, if Olympians are exempt from taxes on their winnings, does that start a slippery slope? Soldiers fight for our country, why do they pay taxes etc etc.
Get rid of income tax, and charge an across the board sales tax on purchases. No I.R.S. needed.
Lets hope they get taxed for the actual metal the are awarded.
A gold medal is - 92.5% silver (sterling silver), plated with at least 6 mm of gold. The remaining 7.5% is copper.
Currently valued at roughly $670 if I recall correctly.
yes, for the silver as I understand it
So the IRS commitment would/should be $30
Most soldiers "Combat pay" is excluded from gross income Diffrent rules for officers and enlisted. Pay for soldiers in non combat zones is not excluded from gross income.
More exemptions? I thought the goal was to get rid of "favored income" so that taxes don't distort the economy....
I agree with you on the awards and lottery winnings and prizes, so these Olympic awards are similar.
Also, while the "lowly" gymnast isn't going to roll in the riches of endorsement deals like Phelps has with Subway... please don't think of these Olympic participants as poor. There's no way they can devote the time, expense, and effort into the required training unless they come from a family who can afford it. There may be exceptions every now and again, but the poor family can't generally afford the stuff it takes to train to be in the Olympics.
Meanwhile... while the slippery slope applies to other things... I have never understood why our soldiers pay income tax anyway. Their salary is paid from the income tax of others in the private sector... so their entire salary is technically tax money already... there's no logical reason to withhold income tax from soldiers and require them to fill out the paper work for tax time like everybody else.
They should be paid a flat tax-exempt salary and let that be the end of it... because it's just silly to use tax money to pay them and then require them to pay back tax money that could have just not been given to them in the first place!
Agree. Some don't like it because sales taxes would necessarily rise + there would need to be a federal sales tax as well as local... but it would be the fairest way to asses taxes. IF you don't want to pay taxes on a product, don't buy it. You get far more choice in this scenario than the current tax code.
Just to clarify, while serving in a designated Combat Zone, all military pay is exempt from federal taxes. And as cj9788 pointed out, commissioned officers fall under slightly different rules.
She'll be just fine. Companies are fighting over her already.
Good for her... I think the all-around winner usually does pretty good, endorsement-wise.
The short story is that all basic income at or below the basic pay of the highest paid enlisted member of the service is not subject to Federal income tax , officer or enlisted. That's your basic "combat pay".
Now, there are other pays that come into effect as well.
Stewart - do you want to treat Federal civilian employees the same way (i.e. pay them less but not subject to federal income tax ) ?
In addition to getting Federal tax exempt status on basic pay (and a few other pays), military members in an designated combat zone also draw a Hostile Fire/Imminent Danger Pay, which many people refer to as "Combat Pay." I just didn't want there to be any confusion between the tax exemptions and the additional pay.
Actually, yes. I didn't want to muddy the waters... but basically the same concept applies. Any person for whom their entire salary is paid by taxes, it just doesn't make sense to withhold taxes from their paycheck and make them file tax forms. It is a lot of unnecessary paperwork to me.
It would be better to just pay them a lower flat salary and be done with it.
Now, that doesn't mean I equate military with all government employees. I don't. Just in this one way, all being paid from the collected tax pool... they should be treated the same because it just makes sense to do it that way.
I think there are other things we can do for our military to show appreciation and support in terms of bonus pay and other benefits in exchange for their service that your average government worker wouldn't be entitled to... but the pay thing, that just makes sense for all government workers.