Wednesday, August 31, 2005

Bush Tax Cuts' Bias Against Art Being Fought

It's not as if most people in the art world needed another reason to dislike President Bush, I know, but here's a thorny little issue: when he finally managed to force through his controversial 2003 tax cuts, Bush reduced capital gains for most assets (including stocks, and bonds, and real estate) from 20% to 15%, but he left artworks at 28%. Now I'm no fan of the Bush tax cuts, but if he's gonna assert that they're meant to stimulate the economy, then leaving the art industry out of that picture is anti-elitism taken to its most unfair extreme.

Finally the art world is preparing to fight back. From the Financial Times (but via the FirsTnews site, which doesn't charge), we learn:

Leading US art dealers have joined with auction houses Christie's and Sotheby's in a big push to reduce the capital gains tax on art and collectibles, in the industry's first lobbying effort in almost 20 years. [...]

Gilbert Edelson, the counsel for the Art Dealers' Association, said: "The internal revenue code is unfair to artists and to collectors. The art industry is one of few that until now has not done anything about legislation, but there has been a growing movement that we should do something about this."

He said the British Art Market Federation had been lobbying effectively for some time in Britain, and the US had looked to this as an example of what might be achieved.

The dealers' association, an invitation-only group of 160 members, has formed the Visual Arts Alliance with the two auction houses, to represent their group effort, and hired two Washington lobbyists to put their case.

The "Visual Arts Alliance" might need to change their name (that moniker's already been claimed by a group from Houston), but it looks as if they might be a force to deal with (and a very pro-artist force at that!):

As a result of the alliance's efforts, Senators Pete Domenici, a Republican, and Charles Schumer, a Democrat, in June introduced the Art and Collectibles Capital Gains Tax Treatment Parity Act, which would make art and collectibles taxed at the same rate as other assets.

The bill also aims to correct a discrepancy which penalises artists. A collector who donates an artwork to a museum is able to claim the donation as a tax deduction, at its fair market value. However, an artist who donates their own work to a museum is allowed to claim only the cost of materials, such as paint and canvas. The bill would allow artists to claim the fair market value of their donation in the same way as collectors.
Now Senators introduce bills to appease rich contributors that don't stand a snowball's chance in hell all the time, and of course the old adage of "be careful what you wish for" applies nowhere as much as it does for groups who want more of the Federal government's attention, but this adjustment is only fair. What should be interesting is watching the Congresscritters who love tax breaks but hate the arts contort themselves into some sellable position on this. Stay tuned.


Blogger Mark said...

Although highly irrational, I liked the tax cuts at tax time. I rationalize it as less for Iraq.(sorry won't mention that here again) As for the breaks for donated art, of course artists should be able to donate at value. I personally would donate more to non profit auctions. Museum collections would benefit greatly. The problem is, the majority of artists aren't in the money and tax issues are not a top priority. The groups you mention in the forefront of this push are mostly wealthy collectors.
Anti-elitism for sure, but easy pickin's in these times.

8/31/2005 09:40:00 AM  
Blogger Mark said...

How about an online auction to support huricane relief. Artists could deduct the sale price of their work.
That is the main issue for artists. Our art is our capital. Our careers are focused on increasing that value.

8/31/2005 09:57:00 AM  
Blogger Edward_ said...

That is an idea...

I'll help, but I'm not sure how to organize it


8/31/2005 10:01:00 AM  
Anonymous Anonymous said...

Capital gains clearly SHOULD be the same for all holdings, and there actually is strong apolitical support for that view (esp. among economists). THis is very doable.

RE the excellent auction suggestion, it should be possible to use contacts at major auction houses, which already have the know how and resources, to create and promo a fundraiser: they would also benefit PR wise and maybe build interest in your capital gains suggestion as well.

George Pieler

9/02/2005 04:25:00 PM  

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