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Taxing Olympians

Most people viewing the 2012 Olympics are interested in cheering on their favorite athletes or home country.

As the United States is a dominant force, there is much to cheer for on this side of the pond. The medal count reflects American athletic prowess; only China threatens to outperform.

Not all fans simply bask in the glow of international supremacy each time the Red, White and Blue is raised above the winner's podium however. These money-obsessed individuals see the tax implications that accompany each medal.

Most countries reward their athletes with cash prizes for their Olympic achievements. The United States is no exception, paying $25,000 for a gold medal, $15,000 for silver and $10,000 for bronze. It should come as no surprise the winnings are subject to income taxes.

Sen. Marco Rubio, R-Fla., wants the practice to end.

"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. "We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."

Backed by research from the Americans for Tax Reform Foundation, Rubio notes the potential tax liability for a gold medal could reach $8,986. Most of the figure comprises income tax; the rest is on the value of the metals used. A gold medal, for example, is made with 92.5 percent silver, 6.16 percent copper and approximately 1 percent gold.

Rubio introduced legislation exempting winning athletes from having to pay these taxes. Both President Barack Obama and challenger Mitt Romney support the proposal.

We believe Olympic fever has gotten the better of these politicians.

First off, imposing tax on any income not only is legitimate but necessary. The athletes are not being punished; they are being forced to follow the rules set out in U.S. tax code. Even if these winners were in the top tax bracket of 35 percent, which is plausible in the case of professional basketball and tennis players but highly unlikely for those on the water polo team, they still retain 65 percent of the prize money.

How any elected official could suggest Olympians deserve favorable tax status over teachers, health-care workers, public safety officials or members of the military is beyond us. We would guess -- and hope -- Rubio's ridiculous suggestion is nothing but chest-beating in the heat of the Summer Games. The legislation is not based on logic or sound fiscal policy. It is pure political theater.

Wage-earners in the U.S. economy are subject to taxation. Pure and simple. If anything, American athletes could be exempted from paying taxes on the value of medals they win. Not that the IRS tracks down decorated Olympians to recover the $236 currently required for each gold, $135 for silver or $2 for bronze based on current commodity prices. Those liabilities are not worth pursuing.

The hubbub surrounding the income tax on Olympic earnings is a non-event. Even in the height of the Games, U.S. officials should keep that in mind.

Editorial by Patrick Lowry

plowry@dailynews.net