Taxing Gabby and Michael
Marco Rubio (R-FL) has introduced a bill he calls The Olympic Tax Elimination Act. The purpose of the act is to provide an income tax exemption for American athletes who win medals at the Olympic Games. Currently, these outstanding athletes are paid a stipend of $25,000 for a gold medal, $15,000 for a silver medal, and $10,000 for a bronze. That's a pretty good paycheck, unless one considers the thousands of hours in the gym, pool, or track that they put in. Except for the attention paid by people who are really devoted followers of sports like swimming, gymnastics, beach volleyball, air rifle, kayaking, and all the rest, these extremely skilled athletes labor in anonymity, striving for the opportunity to represent the nation once every four years. For most of them, one Olympic experience is all they are going to get.
So from a patriotic standpoiont, what Marco Rubio proposes makes a lot of sense. Here is what Mr. Rubio says about his bill. "Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness. Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back home."
"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," he said. "We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."
Well, okay. Fair enough. As a matter of public policy, we exempt the taxes of other people who represent the United States. When deployed to combat zones, U.S. military members not only receive non-taxable hazardous duty pay, they also receive a "combat zone tax exclusion, " which for most military members (especially enlisted members) effectively eliminates all income tax on pay earned in the combat zone. So if we want to exempt the incentive part of the pay of Olympians, well, heck...let's do that. I am not sure anyone should have a problem with that. What we should have a problem with is the language that Mr. Rubio uses to advocate his bill.
First, he tells us that the U.S. tax code is a "complicated and burdensome mess." That is not exactly a news flash. One of the reasons it is such a mess is that Members of Congress have made it that way. Exemptions, deductions, credits, rebates, and the like, have been introduced by members of both parties to reward good behavior, punish bad behavior, stimulate the economy, support certain kinds of business, encourage certain kinds of purchases, provide for education, and many other reasons. The very existence of all of these loopholes is what complicates the tax code. So it is difficult to see how a very specific tax exemption for one very small group of people is going to unclutter the tax code.
Second, he tells us that the Olympians are going to pay an "extra" tax. Not exactly. It seems that the medal incentive pay is probably just another part of the Olympians' ordinary income. So if they make an extra $25,000 one year, they have $25,000 more gross income. How does this constitute an "extra" tax? It is just a tax. In my career, I made progressively more and more money with each promotion. So I paid progressively more in income tax, and had more withheld for Social Security. I hardly considered that some kind of burdensome "extra" tax.
Finally, the most disturbing part of Mr. Rubio's viewpoint is this---he says that if Olympians are taxed on their incentive income, they are being "punished." Punished is the word Mr. Rubio uses to describe a tax. Punishment is what he says they do not deserve because no one who delivers "exellence" deserves to be punished with a tax. Of course, if taxes are "punishment," it is hard for me to imagine who does deserve to be "punished" with them. I am not sure the person who works at the T-shirt shop selling Michael Phelps t-shirts should be punished either.
The last time I checked, the purpose of taxation was to provide revenue for governments at all levels so these governments could deliver the services that the citizens exept of these governments. We can and should debate the kinds and levels of services that governments should provide. We can and should debate the kinds and levels of taxes (and other revenues) that governments should collect. And we should all admit that all fees and taxes are coercive to a certain extent. Governments have the power to collect these revenues, and the enforcement methods to come after those who refuse to pay. But taxes are not punishment. They are part of the social contract. If we want to debate the terms of the social contract, we should do that. But Mr. Rubio seems uninterested in something that difficult.
It is very dangerous for Mr. Rubio and others like him (the unelected Mr. Grover Norquist comes to mind) to identify taxation with punishment. It is part of a grand narrative that says it is possible to balance budgets (not just national, but state and local budgets) simply by cutting taxes. The same people who take the Grover Norquist pledge also reject common-sense solutions to our long-term deficit and debt problems like the recommendations of the Simpson-Bowles report. That is to say, they have presented few answers to our long-term problems. In that, they are not alone. The Simpson-Bowles report, which contained scores of solutions for our long-term structural deficits and borrowing problems, was ignored by the Democrats and the Republicans. Perhaps that is because leaders of both parties are interested, like Mr. Rubio, in making symbolic pronouncements.
Instead of talking about long-term revenue and expenditure issues, Mr. Rubio wants to focus on the incentive income of a infinitesimally small portion of the population. He wants to tell us that these patriotic and stellar Americans are being "punished." Well, fine. Let's not tax them. In fact, let's thank them for inspiring us. They have trained hard. They do represent the best in our nation's youth. They are role models. But please, Mr. Rubio, take some inspiration from them. Buckle down and do the hard work of coming up with some permanent solutions to our growing budget problems. And encourage those of your own party and members of the other party to join you in doing the hard work of looking at long-term solutions. This little bit of Olympic year and election year grandstanding is not doing the trick. You can start by acknowledging that taxes are not a punishment for excellence, they are part of the social bargain.
So from a patriotic standpoiont, what Marco Rubio proposes makes a lot of sense. Here is what Mr. Rubio says about his bill. "Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness. Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back home."
"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," he said. "We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."
Well, okay. Fair enough. As a matter of public policy, we exempt the taxes of other people who represent the United States. When deployed to combat zones, U.S. military members not only receive non-taxable hazardous duty pay, they also receive a "combat zone tax exclusion, " which for most military members (especially enlisted members) effectively eliminates all income tax on pay earned in the combat zone. So if we want to exempt the incentive part of the pay of Olympians, well, heck...let's do that. I am not sure anyone should have a problem with that. What we should have a problem with is the language that Mr. Rubio uses to advocate his bill.
First, he tells us that the U.S. tax code is a "complicated and burdensome mess." That is not exactly a news flash. One of the reasons it is such a mess is that Members of Congress have made it that way. Exemptions, deductions, credits, rebates, and the like, have been introduced by members of both parties to reward good behavior, punish bad behavior, stimulate the economy, support certain kinds of business, encourage certain kinds of purchases, provide for education, and many other reasons. The very existence of all of these loopholes is what complicates the tax code. So it is difficult to see how a very specific tax exemption for one very small group of people is going to unclutter the tax code.
Second, he tells us that the Olympians are going to pay an "extra" tax. Not exactly. It seems that the medal incentive pay is probably just another part of the Olympians' ordinary income. So if they make an extra $25,000 one year, they have $25,000 more gross income. How does this constitute an "extra" tax? It is just a tax. In my career, I made progressively more and more money with each promotion. So I paid progressively more in income tax, and had more withheld for Social Security. I hardly considered that some kind of burdensome "extra" tax.
Finally, the most disturbing part of Mr. Rubio's viewpoint is this---he says that if Olympians are taxed on their incentive income, they are being "punished." Punished is the word Mr. Rubio uses to describe a tax. Punishment is what he says they do not deserve because no one who delivers "exellence" deserves to be punished with a tax. Of course, if taxes are "punishment," it is hard for me to imagine who does deserve to be "punished" with them. I am not sure the person who works at the T-shirt shop selling Michael Phelps t-shirts should be punished either.
The last time I checked, the purpose of taxation was to provide revenue for governments at all levels so these governments could deliver the services that the citizens exept of these governments. We can and should debate the kinds and levels of services that governments should provide. We can and should debate the kinds and levels of taxes (and other revenues) that governments should collect. And we should all admit that all fees and taxes are coercive to a certain extent. Governments have the power to collect these revenues, and the enforcement methods to come after those who refuse to pay. But taxes are not punishment. They are part of the social contract. If we want to debate the terms of the social contract, we should do that. But Mr. Rubio seems uninterested in something that difficult.
It is very dangerous for Mr. Rubio and others like him (the unelected Mr. Grover Norquist comes to mind) to identify taxation with punishment. It is part of a grand narrative that says it is possible to balance budgets (not just national, but state and local budgets) simply by cutting taxes. The same people who take the Grover Norquist pledge also reject common-sense solutions to our long-term deficit and debt problems like the recommendations of the Simpson-Bowles report. That is to say, they have presented few answers to our long-term problems. In that, they are not alone. The Simpson-Bowles report, which contained scores of solutions for our long-term structural deficits and borrowing problems, was ignored by the Democrats and the Republicans. Perhaps that is because leaders of both parties are interested, like Mr. Rubio, in making symbolic pronouncements.
Instead of talking about long-term revenue and expenditure issues, Mr. Rubio wants to focus on the incentive income of a infinitesimally small portion of the population. He wants to tell us that these patriotic and stellar Americans are being "punished." Well, fine. Let's not tax them. In fact, let's thank them for inspiring us. They have trained hard. They do represent the best in our nation's youth. They are role models. But please, Mr. Rubio, take some inspiration from them. Buckle down and do the hard work of coming up with some permanent solutions to our growing budget problems. And encourage those of your own party and members of the other party to join you in doing the hard work of looking at long-term solutions. This little bit of Olympic year and election year grandstanding is not doing the trick. You can start by acknowledging that taxes are not a punishment for excellence, they are part of the social bargain.
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