Legislative Update

Legislation Would Offer Charitable Deduction for Artists’ Gifts

Once again, legislation has been introduced in the House and Senate to amend the federal tax code by providing artists with a fair market value deduction for the charitable contributions of their own literary, musical, artistic, or scholarly compositions. The goal of the legislation is to improve the ability of our cultural institutions to preserve our nation’s heritage.

The Artist-Museum Partnership Act (S.405) was introduced in the Senate on February 10, 2009, by Senators Patrick Leahy (D-VT) and Robert Bennett (R-UT). In the House, Rep. John Lewis (D-GA) and Rep. Todd Platts (R-PA) introduced the companion bill (H.R.1126) on February 23. The Senate measure has 17 cosponsors, and in the House 33 legislators have signed on in support of the bill. Both bills have been referred to the tax-writing committees: Ways and Means in the House, chaired by Rep. Charles Rangel (D-NY), and Finance in the Senate, headed by Rep. Max Baucus (D-MT).

The Artist-Museum Partnership Act has been introduced under various titles in previous sessions of Congress. It has passed the Senate five times. It has never been brought to a vote in the House. This year, the stars may be aligned in favor of the legislation in ways never seen before. President Obama co-sponsored the legislation when he was a member of the U.S. Senate, and enactment of the measure was one of the objectives in his arts policy platform, developed during his presidential campaign.

In 2007, the National Endowment for the Arts (NEA) prepared for the U.S. Senate a Report on Tax Treatment of Artists’ Deductions, in which then-NEA Chair Dana Gioia pointed out that current tax law “undermines the ability of public and cultural institutions, especially those in small and mid-sized cities and towns, to collect and preserve our nation’s cultural patrimony. With no or meager acquisitions budgets, it is impossible for them to compete in the global art market. . . . Under our unique system, the major and most significant impetus for support of the arts is the tax system.”

Most museums, libraries, and archives have limited funds to acquire new works of art; the primary way is through donations. However, living artists, writers, choreographers, and composers have no financial incentive to give their works to a nonprofit institution because they cannot claim a tax deduction for the fair-market value of their work. Rather, they can deduct only the value of materials, such as paper, ink, paint, and canvas. As a result, works of local, regional, and national significance are sold into private hands and never come into the public domain.

Prior to 1969, artists, writers, and composers were allowed to take a fair-market value deduction for their works donated to a museum, library, or archive. In 1969, however, Congress changed the law, and the effect of the legislation was immediate. The Museum of Modern Art in New York received 321 gifts from artists in the three years prior to 1969; in the three years after 1969 the museum received 28 works of art from artists—a decrease of more than 90%. The biggest loser was the Library of Congress, which annually received 15 to 20 large gifts of manuscripts from authors. In the four years after 1969, it received one gift. The Librarian of Congress, Dr. James Billington, has said of the pending legislation, “The restoration of this tax deduction would vastly benefit our manuscript and music holdings, and remove the single major impediment to developing the Library’s graphic art holdings. When this tax deduction was allowed in the past, many urban and rural libraries profited from the donation of manuscripts and other memorabilia from authors and composers who wanted their creative output to be available for research in their local communities.”