[Congressional Record Volume 147, Number 48 (Wednesday, April 4, 2001)]
[Senate]
[Pages S3444-S3445]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Bennett, Mr. Lieberman, Mr. Dodd, 
        Mr. Cochran, Mrs. Lincoln, Mr. Reid, and Mr. Domenici):
  S. 694. A bill to amend the Internal Revenue Code of 1986 to provide 
that a deduction equal to fair market value shall be allowed for 
charitable contributions of literary, musical, artistic, or scholarly 
compositions created by the donor; to the Committee on Finance.
  Mr. LEAHY. Mr. President, I rise today to introduce legislation, the 
Artist-Museum Partnership Act, to enable our country to keep cherished 
art works in the United States and to preserve them in our public 
institutions, while erasing an inequity in our tax code that currently 
serves as a disincentive for artists to donate their works to museums 
and libraries. This is the same bill I introduced last year with my 
colleagues Senator Bennett and Senator Lieberman. I would like to thank 
them for their leadership in this area and also to thank Senators Dodd, 
Cochran, Lincoln, Reid, and Domenici for cosponsoring this bipartisan 
bill.
  In a nutshell, our bill would allow artists, writers and composers 
who donate works to museums and libraries to take a tax deduction equal 
to the fair market value of the work. This is something that collectors 
who make similar donations are already able to do. If we as a nation 
want to ensure that art works created by living artists are available 
to the public in the future, for study or for pleasure, it is something 
that artists should be allowed to do as well. Under current law, 
artists who donate self-created works are only able to deduct the cost 
of supplies such as canvas, pen, paper, ink, which does not even come 
close to their true value. This is unfair to artists and it hurts 
museums and libraries, large and small, that are dedicated to 
preserving works for posterity.
  In my State of Vermont, we are incredibly proud of the great works 
produced by hundreds of local artists who choose to live and work in 
the Green Mountain State. Displaying their creations in museums and 
libraries helps develop a sense of pride among Vermonters and 
strengthens a bond with Vermont, its landscape, its beauty and its 
cultural heritage. Anyone who has gazed at a painting in a museum or 
examined an original manuscript or composition, and has gained a 
greater understanding of both the artist and the subject as a result, 
knows the tremendous value of these works. I would like to see more of 
them, not fewer, preserved in Vermont and across the country.
  Prior to 1969, artists and collectors alike were able to take a 
deduction equivalent to the fair market value of a work, but Congress 
changed the law with respect to artists in the Tax Reform Act of 1969. 
Since then, fewer and fewer artists have donated their works to museums 
and cultural institutions. The sharp decline in donations to the 
Library of Congress clearly illustrates this point. Until 1969, the 
Library of Congress received 15 to 20 large gifts of manuscripts from 
authors each year. In the four years following the elimination of the 
deduction, the library received only one such gift. Instead, many of 
these works have been sold to private collectors, and are no longer 
available to the general public.
  For example, prior to the enactment of the 1969 law, Igor Stravinsky 
planned to donate his papers to the Music Division of the Library of 
Congress. But after the law passed, his papers were sold instead to a 
private foundation in Switzerland. We can no longer afford this massive 
loss to our cultural heritage. This loss was an unintended consequence 
of the tax bill that should now be corrected.
  More than 30 years ago, Congress changed the law for artists in 
response to the perception that some taxpayers were taking advantage of 
the law by inflating the market value of self-created works. Since that 
time, however, the government has cut down significantly on the abuse 
of fair market value determinations. Under this legislation, artists 
who donate their own paintings, manuscripts, compositions, or scholarly 
compositions, would be subject to the same new rules that all taxpayer/
collectors who donate such works must now follow. This includes 
providing relevant information as to the value of the gift, providing 
appraisals by qualified appraisers, and, in some cases, subjecting them 
to review by the Internal Revenue Service's Art Advisory Panel.
  In addition, donated works must be accepted by museums and libraries, 
which often have strict criteria in place for works they intend to 
display. The institutions must also certify that it intends to put the 
work to a use that is related to the institution's tax exempt status. 
For example, a painting contributed to an educational institution must 
be used by that organization for educational purposes. It could not be 
sold by the institution for profit. Similarly, a work could not be 
donated to a hospital or other charitable institution that did not 
intend to use the work in a manner related to the function constituting 
the donee's exemption under Section 501 of the tax code. Finally, the 
fair market value of the work could only be deducted from the portion 
of the artist's income that has come from the sale of similar works, or 
related activities.
  This bill would also correct another disparity in the tax treatment 
of self-created works--how the same work is treated before and after an 
artist's death. While living artists may only deduct the material costs 
of donations, donations of those same works after death are deductible 
from estate taxes at the fair market value of the work. In addition, 
when an artist dies, works that are part of his or her estate are taxed 
on the fair market value.
  Last year, the Joint Committee on Taxation estimated that our bill 
would cost $48 million over 10 years. This is a moderate price to pay 
for our education and the preservation of our cultural heritage. The 
time has come for us to correct an unintended consequence of the 1969 
law and encourage rather than discourage the donations of art works by 
their creators. This bill could, and I believe would, make a critical 
difference in an artist's decision to donate his or her work, rather 
than sell it to a private party, where it may become lost to the public 
forever.
  I want to thank my colleagues again for cosponsoring this bipartisan 
legislation. I also ask unanimous consent to have printed in the Record 
letters from the Association of Art Museum Directors, The Museum of 
Fine Arts, Houston, the Theatre Communications Group, Inc., and the 
Whitney Museum of American Art in support of this bill.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:


                               Whitney Museum of American Art,

                                      New York, NY, April 3, 2001.
     Senator Patrick Leahy,
     Senator Robert Bennett,
     U.S. Senate,
     Washington, DC.
       Dear Senators Leahy and Bennett: On behalf of the staff and 
     Board of Trustees of the Whitney Museum of American Art, I 
     thank you for introducing the ``Artist-Museum Partnership 
     Act''. This legislation, which would allow artists, writers 
     and composers to deduct the fair-market value of a 
     contribution of their own work to a charitable institution, 
     will benefit museums, and their visitors, across the country.
       As a result of changes to the tax code of 1969, visual 
     artists, writers and composers

[[Page S3445]]

     can no longer take a deduction based on the fair-market value 
     of a contribution of their own work. The artists' deduction 
     is limited to the cost of materials in preparing the work--in 
     the case of a visual artist, canvas and paint. However, a 
     collector, making an identical donation, may take the fair-
     market value deduction for the work. Once the artist dies, 
     his or her spouse may donate the work for a fair-market value 
     deduction. In addition, works of art left to an artist's 
     estate are evaluated at the fair-market value for purposes of 
     determining estate taxes.
       Since the 1969 repeal, contributions to museum and 
     libraries by living artists and writers have all but 
     disappeared, depriving the public of access to its cultural 
     heritage. Many of these pieces are sold abroad or into 
     private collections and never seen again.
       Thank you again for your continued support of artists and 
     arts institutions in this country. We are all deeply 
     appreciative.
           Sincerely,
     Maxwell L. Anderson.
                                  ____

                                            Theatre Communications


                                                  Group, Inc.,

                                      New York, NY, April 4, 2001.
     Senator Patrick Leahy,
     Senator Robert Bennett,
     U.S. Senate,
     Washington, DC.
       Dear Senators Leahy and Bennett: On behalf of Theatre 
     Communications Group--the national service organization for 
     the American theatre--and the 384 not-for-profit theatres 
     across the country that comprise our membership and which 
     present performances to a combined annual attendance of more 
     than 17 million people, I thank you for introducing the 
     ``Artist-Museum Partnership Act''. This legislation, which 
     would allow artists, writers and composers to deduct the 
     fair-market value of a contribution of their own work to a 
     charitable institution, is fully supported by Theatre 
     Communications Group, which endorses its passage.
       As a result of changes to the tax code of 1969, visual 
     artists, writers and composers can no longer take a deduction 
     based on the fair-market value of a contribution of their own 
     work. The artists' deduction is limited to the cost of 
     materials in preparing the work--in the case of a visual 
     artist, canvas and paint. However, a collector, making an 
     identical donation, may take the fair-market value deduction 
     for the work. Once the artist dies, his or her spouse may 
     donate the work for a fair-market value deduction. In 
     addition, works of art left to an artist's estate are 
     evaluated at the fair-market value for purposes of 
     determining estate taxes.
       Since the 1969 repeal, contributions to museums and 
     libraries by living artists and writers have all but 
     disappeared, depriving the public of access to its cultural 
     heritage. Many of these pieces are sold abroad or into 
     private collections and never seen again.
       Thank you again for your continued support of artists and 
     arts institutions in this country.
           Sincerely,
                                                      Ben Cameron,
     Executive Director.
                                  ____

                                                    Association of


                                         Art Museum Directors,

                                      New York, NY, April 4, 2001.
     Senator Patrick Leahy,
     Senator Robert Bennett,
     U.S. Senate
     Washington, DC.
       Dear Senators Leahy and Bennett: On behalf of the 
     Association of Art Museum Directors (AAMD), founded in 1916 
     and representing 170 art museums nationwide, I thank you for 
     introducing the ``Artist-Museum Partnership Act''. This 
     legislation, which would allow artists, writers and composers 
     to deduct the fair-market value of a contribution of their 
     own work to a charitable institution, is fully supported by 
     the AAMD, which endorses its passage.
       As a result of changes to the tax code of 1969, visual 
     artists, writers and composers can no longer take a deduction 
     based on the fair-market value of contribution of their own 
     work. The artists' deduction is limited to the cost of 
     materials in preparing the work--in the case of a visual 
     artist, canvas and paint. However, a collector, making an 
     identical donation, may take the fair-market value deduction 
     for the work. Once the artist dies, his or her spouse may 
     donate the work for a fair-market value deduction. In 
     addition, works of art left to an artist's estate are 
     evaluated at the fair-market value for purposes of 
     determining estate taxes.
       Since the 1969 repeal, contributions to museum and 
     libraries by living artists and writers have all but 
     disappeared, depriving the public of access to its cultural 
     heritage. Many of these prices are sold abroad or into 
     private collections and never seen again.
       Thank you again for your continued support of artists and 
     arts institutions in this country.
           Sincerely,
                                          Millicent Hall Gaudieri,
     Executive Director.
                                  ____



                             The Museum of Fine Arts, Houston,

                                      Houston, TX, March 28, 2001.
     Senator Robert Bennett,
     Senator Patrick Leahy,
     U.S. Senate
     Washington, DC.
       Dear Senators Bennett and Leahy: On behalf of the Trustees 
     of the Museum of Fine Arts, Houston, I would like to express 
     my appreciation to you for introducing the ``Artist-museum 
     Partnership Act.'' The legislation is long overdue and will 
     be useful to museums in soliciting original works of art from 
     artists. May museums do not have funds to purchase art and 
     must rely on donations. Since 1969, when the law was repealed 
     that allowed artists to take a fair-market value deduction, 
     contributions from living artists to museums has dramatically 
     decreased.
       Many important works by regional or ethnic artists are sold 
     rather than donated because the majority of artists simply 
     cannot afford to donate their works when they can only take a 
     deduction equal to the cost of materials. The bill you have 
     drafted is an important step in helping small and mid-sized 
     museums add these works to their collections for the public 
     to enjoy.
       Thank you again for this thoughtful piece of legislation.
           Sincerely,
                                                  Peter C. Marzio,
                                                         Director.

  Mr. BENNETT. Mr. President, I am proud to join the Senator from 
Vermont today to introduce the Artist-Museum Partnership Act. This 
important legislation will remove an unfortunate inequity in our tax 
code by allowing living artists to deduct the fair-market value of 
their art work when they contribute the work to museums or other public 
institutions.
  As the tax code is currently written, art collectors are allowed to 
deduct the fair market value of any piece of art donated to a museum. 
At the same time, if the artist who created that work of art were to 
donate the same piece, he or she would be allowed to deduct only the 
material cost of the work, which may be nothing more than a canvas, a 
tube of paint, and a wooden frame. This inequity has created a 
disincentive for artists who would otherwise donate their work to 
museums. The solution is simple: treat collectors and artists the same 
way. This bill will do just that.
  While this bill will certainly help artists, the real beneficiaries 
are museums, historians, and most importantly, the general public. This 
change in the tax code will increase the number of original pieces 
donated to public institutions, giving scholars greater access to an 
artist's work during the lifetime of that artist, as well as providing 
for an increase in the public display of such work. Museum-goers will 
have a greater opportunity to learn not only from the master artists of 
past centuries, but also from artists who are at the forefront of their 
fields today.
  I want to thank Senator Leahy for his work on this bill. He and I 
have introduced similar legislation in the past, and we hope that our 
colleagues will see this bill for what it is a reasonable solution to 
an unintentional inequity in our tax code. I urge my colleagues to 
support this common-sense legislation. The fiscal impact of the Artist-
Museum Partnership Act on the federal budget will be minimal, but the 
benefit to our nation's cultural and artistic heritage cannot be 
overstated. This minor correction to the tax code is long overdue, and 
the Senate should act on this legislation to remedy the problem.
                                 ______