You could see this coming the moment Grover Norquist’s Americans for Tax Reform put out its press release on the tax liability of U.S. Olympics athletes who win medals and the honoraria that go along with them: Sen. Marco Rubio has introduced a bill creating a brand new tax loophole for the stars who are dominating our TV screen this week. The Atlantic’s Conor Friedersdorf explains why this is an idea that is fully as stupid as it sounds:Because USA! USA! USA!, that's why. And also they are heroes.[T]his is a perfect example of why the tax code is a complicated and burdensome mess. Guys like Senator Rubio stumble upon a category of earning that they regard as being “different,” whether because there are campaign contributions in it for them, or because it advances a larger ideological agenda or, as in this case, because the category of people being taxed are popular. This particular loophole accords with a widespread intuition that the prize money and medals from an Olympic victory are unlike “regular income” that is subject to routine taxes….
But these are bad reasons to create a special exemption. The fact is that prize money from athletic victories is income, and there is no good reason for the government to treat that income differently than the income of all the non-Olympic athletes who earn analogous types of income. Why should Olympic athletes be exempted from paying taxes on their prize money, but not professional golfers, or poker players, or winners of literary prizes, or folks who win the lottery?