[Congressional Record Volume 149, Number 20 (Tuesday, February 4, 2003)]
[Senate]
[Pages S1889-S1890]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Bennett, Mr. Bingaman, Mr. 
        Cochran, Mr. Daschle, Mr. Durbin, Mr. Graham of Florida, Mr. 
        Kennedy, Mr. Lieberman, Mrs. Lincoln, Mr. Warner, Ms. Cantwell, 
        Mr. Jeffords, Mr. Johnson, and Mr. Kerry):
  S. 287. 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 with Senator Bennett to 
introduce the ``Artist-Museum Partnership Act of 2003.'' Our bipartisan 
legislation will 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 we introduced the past two Congresses. 
It was also included in the Senate-passed version of the President's 
2001 tax cut bill and in the Finance Committee's version of the Charity 
Aid, Recovery, and Empowerment, CARE, Act. I would like to thank 
Senators Bingaman, Cochran, Daschle, Durbin, Graham of Florida, 
Kennedy, Lieberman, Lincoln, and Warner for cosponsoring this 
bipartisan bill.
  Our bill is sensible and straightforward. It 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, this 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 and 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 contemplated 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. These losses are 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

[[Page S1890]]

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 institution must 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 Congress, the Joint Committee on Taxation estimated that our 
bill would cost $50 million over 10 years. This is a moderate price to 
pay for our education and the preservation of our cultural heritage.
  I want to thank my colleagues again for cosponsoring this bipartisan 
legislation. 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.
  Mr. BENNETT. Mr. President, I am proud to join the Senator from 
Vermont today to introduce the Artist-Museum Partnership Act. He and I 
have introduced this 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.
  This legislation would allow living artists to deduct the fair-market 
value of their art work when they contribute their work to museums or 
other public institutions. As the tax code is currently written, art 
collectors are able to deduct the fair market value of any piece of art 
they donate to a museum. However, if the artist who created that same 
piece of work were to donate it, he or she would only be able to deduct 
the material cost of the work, which may be nothing more than a canvas, 
a tube of paint, and a wooden frame. Thus, there exists a disincentive 
for artists to donate their work to museums. The solution is simple: 
treat collectors and artists the same way. This bill would do just 
that.
  Certainly, this bill would benefit artists, but more importantly, the 
beneficiaries would be the museums that would receive the art work and 
the general public who would be able to view it in a timely manner. 
This change in the tax code would 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 
provide for an increase in the public display of such work.
  I would like to thank Senator Leahy for his work on this bill. I urge 
my colleagues to support this common-sense legislation. The fiscal 
impact of the Artist-Museum Partnership Act on the Federal budget would 
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.
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