Tax-exempt Olympic medals? That's silly.

The idea that Olympic medals should be tax-exempt is one of the few things Republicans and Democrats can agree on. And they're both wrong.

President Obama and conservative GOP senator Marco Rubio (R-FL) agree: Olympic medals and the cash awards that go with them should be tax-exempt. This is the dumbest idea of the summer—and in our overheated campaign season, that’s saying something.

The idea seems to have originated with anti-tax advocate Grover Norquist. Rubio instantly turned Norquist’s press release into a bill. By yesterday, Obama had his spokesman join in the pandering, perhaps hoping that a bit of the game’s nationalistic enthusiasm would rub off of his presidential campaign.

What’s going on here? U.S. athletes who win their competitions get two forms of direct compensation. First, of course, is their medal—gold, silver, or bronze. The commodity value of the hardware is very modest, ranging from perhaps $700 for gold to about $5 for bronze. Second, the U.S. Olympic Committee (not the U.S. government) pays a cash bonus of $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Those winnings are taxable just like any other income. The Rubio bill would make them tax-exempt. If you want to know more, PolitiFact has a nice, more detailed description.

I suspect much of the support for this silly idea is based on the mostly-outdated myth of the self-sacrificing amateur athlete who gives up all in the Olympic spirit. Chariots of Fire and all that.

But the dons who run the Olympics have let professionals compete for more than 40 years. As a result, many of those who would benefit from this tax cut are as far from amateurs as one could imagine.  LeBron James, for instance, made $57 million last year in salary and endorsements. Kobe Bryant made $52 million. Michael Phelps made $10 million. Does BronBron really need an $8,700 tax cut? Seriously?

And even those winners who have not yet cashed in will do so soon enough. As Gabby Douglas is about to learn, a gold medal and a nice smile is worth untold bucks on Madison Ave.

Are there still U.S. athletes who compete for the love of their sport, and make great personal and financial sacrifices to participate in the Olympics? Absolutely.  Many medal-quality athletes now have sponsors who pay most of their expenses but some, especially those in minor sports, must work temporary or part-time jobs to pay the rent while training.

The thing is, those self-sacrificing athletes won’t be helped very much by this new bill. A single person whose only income is her $25,000 cash award and who has no deductions would owe about $1,900 in federal income tax. But, of course, a world-class athlete would likely have many deductible expenses—for coaching, travel, equipment and the like. It is not unreasonable to suspect that in the real world, many of those low-income non-professional athletes already owe little or no tax on their Olympic cash bonus.

Let’s not kid ourselves, the Olympics is big business. Paying athletes performance bonuses for winning medals is no less commercial than anything else the Olympic bosses do. But why this extra cash should be tax-free escapes me. At least hedge fund operators have to pay capital gains taxes on their bonuses.

As my colleague Eric Toder reminds me, there once was a time when this sort of special tax treatment was slipped into revenue bills by high-paid lobbyists in the dark of night. Now, the code has been so corrupted that pols propose this junk without even being asked. For that, I suppose, they deserve the gold medal of stupid tax tricks.