From the WSJ Opinion Archives
LEISURE & ARTS
Give Artists a Break
Here's a tax cut that will enrich us all.
At first glance, the pending House and Senate bills named "Artists' Contribution to American Heritage Act" and "Artist-Museum Partnership Act" must conjure up boondoggles. They share the nomenclature that characterizes inside-the-Beltway language, which inevitably encourages suspicion and cynicism: Who's putting something over on the American taxpayer this time? A closer look might even add to our misgivings: artists getting tax deductions when they give their works to public institutions. Another special interest will be coddled at taxpayer expense!
In fact, these ineptly named bills, currently awaiting House-Senate Conference Committee resolution, represent critical attempts to assist American libraries, archives, museums and the like in acquiring scientific and musical manuscripts, personal papers of notables, historical documents, and works of art. They were the result of many years of concern by the creative and institutional communities that they were being unfairly treated by the tax laws.
Prior to 1969, anyone who created such works could deduct their fair-market value, provided that the works were donated to an appropriate institution. So why was this conventional provision written out of the tax laws more than three decades ago? In part there was suspicion that the donors were ripping off the system, by claiming value that might or might not be there.
But there's a fairness element here: Now, for example, if a collector gives his Jasper Johns paintings to a museum, he can deduct their full market value. But if Jasper Johns gives the paintings he made himself, he can deduct only the cost of the materials used to make them. Ironically, when their creators die, these same items suddenly gain conventional market value for estate-tax purposes. Definitely out of whack!
Enter these House and Senate bills, introduced in 1999 and 2000, respectively, and carefully crafted to avoid the possibility of faking your way through the system. The documents, papers, art, etc. must have been created at least 18 months prior to the donation and must be part of the continuing public work of the donor. A fair-market-value appraisal of the work must be obtained from a qualified appraiser. There has to be a relationship between the work and the receiving institution (i.e., giving art to a soup kitchen won't make the grade).
Who cares, and why does it matter in a world of infinitely rich collecting institutions? Well, the major beneficiaries of a change in the law aren't likely to be the Library of Congress or the Metropolitan Museum of Art--although they, too, have potential gains from passage of these bills. It's out across the country where the action is likely to be--in local libraries, state and local historical societies and archives, and art and history museums. This tax inequity has had poignant results for institutions across America. Important materials that might stay in their communities get sold to the highest bidder somewhere else--thus disappearing from public view, for study or enjoyment. Or they don't go anywhere and may even be destroyed--just because a museum or a library doesn't have the funds to purchase them and the creator will be damned if he's going to give away his life's work without even getting a reasonable tax deduction.
Here's an example from among many. The Cedar Rapids Art Museum, a small gallery in America's heartland, has a distinguished collection of American art, and, given current market constraints over the past couple of decades, has started to concentrate on collecting Midwestern art. But director Terence Pitts reports that his acquisitions budget can't sustain even a $5,000 or $6,000 purchase, so the incentive for Midwestern artists to donate to this truly prestigious collection is critical for the health of the museum and the cultural life of the Cedar Rapids, Iowa, community. Should the artist subsidize the museum by making a gift that has no tax benefits?
As with all tax bills, one need worry about the revenues lost or the cost to the taxpayer, and current estimates are that over a 10-year period the cost of this bill is likely to be about $59 million--a figure almost amusing in light of the billions being discussed these days. Its passage would enable many of our collecting institutions, especially those in smaller communities, to return to their pre-1969 state of collecting and preserving what by rights belongs in them--reflecting their sense of custodianship and responsibility for the works that allow us to understand our past and our culture. The long-term benefits are crucial to our understanding of America's regional, ethnic, religious and artistic heritages that might otherwise be lost. Maybe "Heritage" and "Partnership" aren't such bad names after all, since they both conjure up values that most of us can buy into.
Mr. Freudenheim is a former assistant secretary for museums at the Smithsonian Institution.
