Want to know why our Tax Code is so screwed up? Here you go, courtesy of the Washington Post:
Did you know that U.S. athletes owe taxes any time they win a medal? Republican lawmakers — clearly seizing on Olympic fever and general displeasure with the tax code — want to change that.
After winning gold in London, an Olympic athlete also stands to earn a $25,000 honorarium. Silver medalists receive $15,000 and bronze medalists are slated to leave London with a $10,000 payday. Current U.S. tax law requires athletes to add the value of medals and honorariums to their taxable income — just as any winning game show contestant would have to pay taxes on a new car or toaster oven.
But Sen. Marco Rubio (R-Fla.) and Rep. Blake Farenthold (R-Tex.) introduced legislation that would exempt American medal-(winners) from paying taxes on their Olympic winnings.
It's not just Republicans who are dizzy with Olympic fever. President Obama has said he supports the legislation as well.
Time for a reality check, folks: The current Tax Code and related materials (as published annually by CCH) checks in at a mind-numbing 25 volumes and 73,608 pages. This political debate over Olympic taxes (and that's all it is — political showmanship) is a perfect example of why the Tax Code is so bloated — and why comprehensive tax reform is next to impossible.
Every time a lawmaker zeros in on some populist claptrap or pet project, it gets crammed into the already stuffed Tax Code. Then, like clockwork, every four years our elected leaders complain about how convoluted our Tax Code is.
Listen, no one loves the Olympics more — or cheers louder for our American athletes — than me. But nothing is going to change until this kind of nonsense stops.
“(T)his is exactly the kind of thing that has made our Tax Code more complicated, not more simple,” Kelly Phillips Erb writes for Forbes.com. “Creating exceptions for what is, relatively speaking, a very small percentage of the population adds yet another layer of complexity to the Tax Code and raises more questions instead of creating solutions. Do we need tax reform? Of course we do. Does exempting our athletes from federal income tax make that happen? Of course it doesn’t.”
“Taxes should be as simple as possible,” adds Planet Money's Jacob Goldstein. “A $25,000 prize the U.S. Olympic Committee pays you for winning a gold medal should be taxed exactly the same as $25,000 a restaurant pays you for washing dishes.”
But that would be too easy, and politicians don't like “easy” as much as they like “popular.” That's why our Tax Code is almost 74,000 pages long.
Comprehensive tax reform starts on page 1. Want to take a stab at it?
I didn't think so. And there's the problem: When we're giving tax breaks to beach volleyball players, how can we possibly expect to see real change?
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