The law of unintended consequences? US federal taxation and the market for modern art in the United States

Robson, Deirdre ORCID: (2016) The law of unintended consequences? US federal taxation and the market for modern art in the United States. In: Art Markets and Politics: State Control and Trade in Global Perspective, 11-Nov-2016, Berlin, Germany. (Unpublished)

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If laws such as export controls obviously impact art market developments, how fiscal law has influenced some art markets is perhaps less recognised in Europe than it might be. This paper will focus on how the New York art market was shaped by Federal tax law in the mid-twentieth century, more particularly from the 1913 Revenue Act through to the 1980s. Although too simplistic to argue for causal links between the fiscal and actual developments in the New York art market, this paper argues that US tax law – and more particularly tax exemptions for charitable contributions which enabled individuals to lower their gross tax liabilities - had unintended consequences for the U.S. art market. First was that museums became a major player in the market for modern art in a way which was unknown in European art market centres. Secondly, for wealthy American collectors, art, courtesy of the US government, became not just a means to public approbation, but a tax-efficient way of financial planning., and ‘name’ private art collections—such as Jock Whitney or Nelson Rockefeller—were seen as ipso-facto public museum holdings. If an unintended consequence of tax law was to create an art market system in New York in which the museum was a major player, the tax ‘reforms’ introduced by the Reagan Administration in the mid-1980s could be seen to raise questions as to consequences upon art market structure. These reforms reduced nominal income tax rates and limited the range of exemptions and ‘loopholes’ present in previous tax codes, including those relating to charitable donations. Although not an immediate consequence, it became apparent that the flow of ‘blue chip’ art from private collectors into American art museums was endangered. Some collections previously likely to enter museums appeared at auction from the late 1980s onwards, at times despite ‘softness’ in the NYC auction market.

Item Type: Conference or Workshop Item (Paper)
Subjects: Arts > Gallery and museum
Arts > Art and design history
Depositing User: Deirdre Robson
Date Deposited: 11 Apr 2018 20:30
Last Modified: 28 Aug 2021 07:09


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