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Fla. Sen. Rubio introduces bill to make Olympic prizes tax-exempt

From left to right, Conor Dwyer, Michael Phelps, Ryan Lochte, Ricky Berens poses on the podium with their gold medals after winning the men's 4x200m freestyle relay final during the swimming event at the London 2012 Olympic Games on July 31, 2012, in London.
FABRICE COFFRINI

Updated 12:30 p.m. ET

(CBS News) Winning an Olympic medal may be priceless to an athlete and his or her fans, but not to the IRS.

Florida Sen. Marco Rubio introduced a bill Wednesday that would make the medals and prize money awarded to U.S. athletes at the London games - they get thousands of dollars in addition to the medals - exempt from taxes.

In a statement, the Tea Party-backed Florida senator blamed the tax rule on a "complicated and burdensome mess" of a system "that too often punishes success."

Republicans vow to reverse birth control policy
Sen. Marco Rubio, R-Fla., center, gestures during a news conference on Capitol Hill in Washington, Wednesday, Feb. 8, 2012.
AP Photo/J. Scott Applewhite

"Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back at home," Rubio said in a statement about the Olympic Tax Elimination Act on Wednesday.

Any money that Olympians receive for winning gold, silver or bronze on behalf of the United States in London gets taxed up to 35 percent, according to research done by the Americans for Tax Reform.

The U.S. Olympic Committee, a non-profit based in Colorado Springs, awards $25,000 to gold medal award winners, $15,000 to silver medalists and $10,000 who earn bronze in a program they call Operation Gold.

The 35-percent tax rate applies to both the prize money and the raw value of the medal itself. Americans for Tax reform calculates that according to today's commodity prices, the value of a gold medal is about $675, silver is worth $385 and a bronze medal is worth under $5.

That means that the U.S. women's gymnastics team, for example, could be paying back up to $8,986 tax on the $25,000 they get on each of their gold medals. So would swimmers Conor Dwyer, Michael Phelps, Ryan Lochte, Ricky Berens for winning the 4x200m freestyle relay final. Silver medalists have a $5,385 tax burden; athletes on the third tier of the stage will be coughing back $350.

How much are Olympic medals actually worth?

The ATR, which opposes tax increases "as a matter of principle," adds that because the U.S. is one of few countries who tax on income earned overseas by its taxpayers, winners from most other countries won't be paying taxes on their prizes.

Politifact points out, however, that athletes can reduce the tax hit by deducting any unreimbursed business expenses (traveling, equipment, etc.) from their bonus. Additionally, the 35 percent tax rate applies to athletes who make at least $380,000 a year.

USOC said that athletes can receive additional rewards from non-governmental bodies, but the organization does not track those.