Olympic Medalists & Their Tax Bill

Little known fact, it turns out that Olympiads returning with a medal will finish the year with an extra bump in their tax burden. Why you might ask? Well, along with the medal, the IOC also awards honorariums depending on how an athlete finishes.  According to one source, the prize for a bronze medal will give the Olympiad a $10,000 bonus, but the government will take its share of 35%.

Unfortunately, that would be true if the Olympiad was already at the highest tax bracket (such as the USA Men's Basketball Team), but for true amateurs participating in the sport (say, Judo?), they will unlikely be forced to pay the full tax rate. When I was a student on an assistantship, I had made a whopping $16,000 one year, with an effective tax rate of 2%. Needless to say, most Olympic athletes are not paying the full 35%.

But wait, there's a savior in this "mess." Florida senator Marco Rubio (R), who's really a Tea Party candidate disguised with an (R) after his name, has made remarks of having this tax removed from Olympiads' tax bill. While it sounds all fair and well, it's highly illogical, and purely political. For the true amateurs, they aren't paying the full burden, and most likely have other jobs and/or sponsorships to help cover this costs. For the professional athletes at the Olympics (cough, Lebron James), they need less reasons to pay taxes. For those who complain about the tax code being too complicated (which Rubio also admits), this is just one more article in that hefty 73,608 book.

Economics of the Olympics

Many people around the world are jumping for joy at the proceedings of the 30th Olympiad, and for good reason! This marks the first time in Olympic history that every country participating has sent at least one female representative, as well as the first time that females outnumber the male participates for the USA (LA TIMES). These countries include Brunei, Qatar, and Saudi Arabia. In my mind, it's still interesting that Qatar bid for the 2016 Olympics considering that women would need to compete and the country is only just now sending female participants.

But I digress. If you're interested in seeing the effects of the Olympics on countries' GDP, most would be surprised to find that it either has no effect or negative effects. Why you ask? Well, government spending increases substantially prior to the actual games with the building of stadiums, road improvements, and even security. However, once the games are over, the government cuts back substantially. This shock sometimes sends countries into a frenzy. For an interesting look at the "Post Olympic Effect," check out this piece by the Federal Reserve Bank of San Francisco (PDF). Oh, and Go Team USA!