Expect Significant "Medal Inequality" at the 2012 London Olympics. Should There be a "Medal Tax"?

	Share of Adjusted Gross Income, 2008	Share of Olympic Medals, 2008
Top 5%	34.73%	36.22%
Top 10%	45.77%	53.11%
Top 25%	67.38%	71.47%
Top 50%	87.25%	91.03%

The table above shows a comparison of: a) the shares of Adjusted Gross Income for the top 5%, 10%, 25% and 50% of U.S. taxpayers in 2008 (IRS data here), and the shares of the Summer Olympic Medals for the top 5%, 10%, 25% and 50% of countries that earned at least one medal in 2008 (data here).   

Notice the amazing similarity between the shares of adjusted gross income earned in the U.S. in 2008 and the shares of the 1,918 Olympic medals awarded in 2008, in both cases by the top 5, 10, 25 and 50% of "participants" or "earners."
 

The "income inequality" that seems to disturb so many people in the U.S. is very closely matched with an even slightly higher degree of "Olympic medal inequality," and we'll likely get the same unequal distribution of Olympic medals this summer in London.  It's almost certain that we'll hear no objections or concerns over the next few weeks about the inevitable and significant "medal inequality," and that inequality will generate no calls for "medal taxes" on the top 5% of medal winners (e.g. U.S., China, Russia or the U.K. in 2008) or "medal redistribution" from the U.S. and China to the dozens of countries that will win no medals. 

Just imagine for a moment how "Olympic medal taxes," and especially a "progressive Olympic medal tax," with subsequent "medal redistribution" at the Final Ceremony to achieve a more "equal distribution of medals" would quickly destroy the competitive spirit of the Olympics and reduce the overall level of athletic performance, especially for the "extreme," world-class athletes at the top like Michael Phelps. If the final ceremony at the Olympics included imposing a medal tax on an "extreme athlete" like Michael Phelps, and redistributing some of his gold medals to countries that earned "too few" medals by some consensus (or no medals like Bolivia, Pakistan, Uganda and dozens of other countries in 2008), you can imagine what might happen - he might not show up at the next Olympics, or certainly wouldn't have the same incentive to train as hard.

We might get the same outcome when we attempt to tax the top, or "extreme income earners" - at some point they'll stop working or won't have the same incentive to work as hard and earn as much taxable income.

Bottom Line: The Olympic medal winners are respected and admired, despite the significant amount of "medal inequality" that results from that intense world-class competition. Instead of always vilifying them, perhaps we should pay the same respect to the world-class winners of the American free enterprise system - the successful "extreme" entrepreneurs at the top of our economic ladder who are represented in the top 1, 5 and 10% by income.