Legislation that would exempt California athletes' Olympic medals and financial prizes from state income taxation cleared its first hurdle Thursday, but crashed into the second.
The Senate Governance and Finance Committee approved Assembly Bill 1786 by Assemblyman Allan Mansoor, R-Costa Mesa, on a 5-1 vote even though the committee staff said in an analysis that it "is the exact opposite of sound tax policy" by giving a narrow exemption to one form of income while taxing others.
"The committee may wish to consider whether running afoul of good tax policy is worth the bill's kind gesture," the staff analysis advised. It also noted that winners of other achievement prizes, including the Nobel Prize, pay taxes on their grants, and asked: "Why should one set of successful competitors be excluded from tax when others have to pay?"
The only member to agree with that, apparently, was Sen. Christine Kehoe, D-San Diego, who asked why highly paid athletes such as the NBA players on the U.S. basketball team should benefit and voted against the hastily drafted measure. But Mansoor did say he would amend the bill to narrow its application to only the medals and official honoraria, not any champion athletes' earnings from endorsements and other ancillary activities.
Later, Mansoor appeared before the Senate Appropriations Committee, which Kehoe chairs, to seek movement of the measure to the Senate floor, but ran into concerns about the potential loss of revenue. The bill was placed "in suspense" and Mansoor's office said he would try to write amendments that would allow it to move.
California is home to more Olympic medal winners than any other state.
Editor's note--Revised at 2:55 p.m. to reflect Appropriations Committee action.
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