[Congressional Record Volume 145, Number 156 (Monday, November 8, 1999)]
[Extensions of Remarks]
[Page E2298]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE ARTISTS' CONTRIBUTION TO AMERICAN HERITAGE ACT

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                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                        Monday, November 8, 1999

  Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from 
Maryland, Mr. Cardin, together with a bipartisan group of our 
colleagues, in introducing the ``Artists' Contribution to American 
Heritage Act of 1999.'' The bill would alleviate an unfairness in the 
tax law as it applies to charitable donations of property by the 
taxpayer/creator and significantly enhance the ability of museums and 
public libraries to acquire important original works by artists, 
writers and composers, and ensure the preservation of these works for 
future generations.
  Since 1969, the law has provided that the creator of the artistic 
property is only allowed a charitable deduction equal to the cost of 
the materials that went into the property. For example, an established 
artist who donates a painting to the local museum is allowed a 
deduction for the cost of the canvas, brushes and paint, etc., used to 
produce the painting. Of course, these amounts are de minimis. There is 
no real tax incentive to contribute such works of art for the public to 
enjoy. In fact, the tax law works in the other direction. It makes more 
financial sense to the creator to sell his or her work. If a collector 
or art buff buys a painting that appreciates over time, because the 
artist becomes well-established or was a known and collected artist 
when the painting was purchased, the collector is allowed a deduction 
for fair market value when the painting is contributed to the local 
museum. This is the fairness issue.
  There has not always been such disparate tax treatment. Before 1969, 
the artists/taxpayers received the same treatment--the deduction was 
based on fair market value. The law was changed, primarily because of 
the perception that some taxpayers were taking advantage of the law 
through less than accurate valuations of their charitable gifts.
  After the change in 1969, gifts of donor generated art work 
(paintings, manuscripts, compositions, artistic and historically 
significant correspondence and papers) to qualifying charitable 
organizations and governmental entities dropped significantly. Creators 
were more likely to sell their works than to contribute them. Tom 
Downey, a former colleague of ours, introduced similar legislation in 
1985. In his floor statement he noted that Igor Stravinsky had planned 
to donate his papers to the Music Division of the Library of Congress 
the month the 1969 tax change was signed into law. Instead, the papers 
were sold to a private foundation in Switzerland. Now, 14 years later 
the situation has not improved. It is time to change our law to 
encourage rather than discourage such contributions.
  There have been significant changes in the valuation process since 
1969. All taxpayers making charitable contributions of art work (other 
than donor generated art work) are required to: (a) provide and/or 
retain relevant information as to the value of the gift, (b) provide 
appraisals by qualified appraisers or, in some cases, (c) subject them 
to review by the IRS's Art Advisory Panel, depending on the dollar 
amount of the contribution. These changes would apply to creator-
donated property under our proposal.
  In addition to the valuation safeguards already in the law, our 
proposal would add additional protections to prevent abuse. These 
include the following: (a) limiting the value of the deduction to the 
amount of income the creator received from similar property, (b) 
providing that the deduction can only be claimed in the year of 
contribution, i.e., the carryover rules do not apply, (c) limiting the 
deduction to property created at least 18 months before the 
contribution, (d) limiting the deduction to gifts related to the 
purpose of the institution which receives it, and (e) excluding 
contributions of property (letters, memos, etc.) created by taxpayers 
in their role as employees or officers of an organization.
  The benefit to the nation when artists are encouraged to contribute 
their work during their lifetime cannot be overemphasized. It allows 
the public, historians, scholars and others to learn from the artist 
his/hers aesthetic aims for the work; how it was intended to be 
displayed, performed, or interpreted; and what influences affected the 
artist.
  Our proposal represents an important step in providing some tax 
incentive, with needed safeguards, for the creators and moves toward 
putting them on the same footing as collectors who contribute similar 
property. Most importantly, it could make the difference in a decision 
by the creator/donator to contribute some of their created art works to 
a museum or public library, rather than sell them in the marketplace. 
That way important works are preserved in the public domain and we all 
benefit. We urge our colleagues to join us in cosponsoring this 
legislation.

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