Nobody From Nowhere (@i8dc)

Occasional Common Sense

Shocking Development: A Grover Norquist Argument is Bogus

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News today that some members of Congress, rather than working on reducing unemployment or preventing the economy from going over the “fiscal cliff,” have introduced legislation to exempt Olympic medal winners from taxes on their winnings. I won’t argue the wisdom of differentiating these winnings from other winnings, such as lotteries, game shows, poker tournaments, or sporting competitions. Not here anyway.

I want to look at the math.

Norquist’s Americans for Tax Reform (aka Americans for Lower Taxes Over All Else) posted an “analysis” of the tax impacts of winning medals. “American medalists face a top income tax rate of 35 percent,” wrote ATR’s Hugh Johnson. Under U.S. tax law, they must add the value of their Olympic medals and prizes to their taxable income. It is therefore easy to calculate the tax bite on Olympic glory.”

The post then leads into a table showing “total tax burden” with the question: “So how much will U.S. Olympic medal winners have to pay in taxes to the IRS?”

The problem: the table shows the maximum that medalists might pay.  To reach the 35% bracket shown by Norquist’s group, a Olympian would have to have taxable income in excess of $388,350 — before winning the gold. How many medal-winning athletes do you think have incomes at this level?  Michael Phelps and the men’s basketball team and…?

The silly thing here is that Norquist’s group doesn’t need to fudge the numbers to make their point.  But for ATR, bigger numbers are scarier and the target audience eagerly swallows whatever ATR spoons out.

And so Congressional Republicans work to lower taxes for a hundred or so Olympic athletes, when they could be quite easily lowering future taxes on all taxable income under $250,000.

Maybe the ATR’s Olympic “analysis,” based on the few athletes making more than $388,350, is correctly focused after all.

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Written by David Clayton

August 2, 2012 at 12:19 pm

Posted in Debunkery

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