EoW November 2012

Transatlantic Cable

“I enjoy watching and honouring the Olympic athletes,” Assemblyman Tom Ammiano (Democrat, of San Francisco), told the Times . “But I think our tax focus should be placed on making sure California’s budget burden is shared fairly. If California wants to go for the gold, we could close tax loopholes now enjoyed by the wealthy.” In the end, Mr Ammiano’s view prevailed. On 16 th August – four days after the spectacular closing ceremony in London – the Senate Appropriations Committee shelved the Mansoor measure. Some senators questioned the fairness of waiving taxes on Olympic medals, given that champs in other contests have to pay Uncle Sam on their winnings. Others suggested that awarding tax breaks may not be the best thing right now, given California’s current budget woes. On leaving o ce in January 2011 the state’s former governor, Arnold Schwarzenegger – who resumed his action-hero Hollywood career with the opening of “The Last Stand” on 16 th August – bequeathed California a $26bn de cit. His successor, Gov Jerry Brown, has since whittled the shortfall to $9bn. That is extraordinary progress, by any measure; but evidently it is not enough to induce a tax-forgiveness mood in those charged with closing the gap completely. The United States to the United Nations: regulatory control of the Internet is in safe hands with us, and will stay there In a display of unanimity that would be remarkable at any time – but especially within months of the US presidential election set for 6 th November – the US House of Representatives on 2 nd August voted 414-0 to notify the United Nations International Telecommunication Union that the Internet does not require new international regulations. The House resolution calls on US government o cials to tell the ITU and other international organisations that it is the “consistent and unequivocal policy of the United States to promote a global Internet free from government control.” The lawmakers were serving notice that they strongly support the status quo whereby several non-pro t US agencies oversee the technical speci cations and domain name system of the Internet. Independent of the US government, these agencies nonetheless operate o cially under the control of the United States Department of Commerce. Telecom

Taxing the Olympians

US medallists came back from London to a hearty welcome home – but also with hefty tax obligations “When sprinter Allyson Felix returns home to Southern California with her Olympic gold medal, she may have to share her good fortune with her government.” Writing in the Los Angeles Times on 10 th August, Patrick McGreevy was referring to the $25,000 honorarium that American Gold medallists receive from the US Olympic Committee. It is subject to both federal and state taxes, as is the $15,000 for silver medallists and the $10,000 for bronze winners. According to data from the US Olympic Committee, 93 medals were won by US athletes who reside in California or list a hometown in the state: 52 golds, 28 silvers and 13 bronzes. These represent about 35 per cent of the total number of medals won by US athletes. The taxes involved are not inconsiderable. A gold medallist taxed at the California average rate of 5.8 per cent could pay $1,450 in state taxes on $25,000, state o cials said. Americans for Tax Reform calculated that the same gold medallist would also pay close to $9,000 to the Internal Revenue Service (IRS) in federal income tax, although some tax experts say athletes could pay less after taking deductions for their training expenses. Writing two days before the close of the Olympics, Mr McGreevy reported that a bipartisan group of state lawmakers wanted to help Ms Felix and more than 30 other California medallists by exempting the honorariums and the value of their medals from state taxes. The legislators were following the lead of members of Congress who had proposed forcing the IRS to stay clear of medals earnings. “These Olympians are ambassadors for our country and our state, and their sacri ces are often overlooked and taken for granted,” said Assemblyman Allan Mansoor (Republican, of Costa Mesa), adding that some athletes and their families “go through severe nancial hardships” to nance their training. But opponents of the bill sponsored by Mr Mansoor, which would have exempted Olympians from paying taxes on their medals, held that the winners were likely to eld lucrative endorsement o ers on their return from London.

Image: www.bigstockphoto.com Photographer Zsolt Ercsel

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November 2012