[Congressional Record Volume 149, Number 27 (Thursday, February 13, 2003)]
[Extensions of Remarks]
[Pages E242-E243]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE ARTISTS' CONTRIBUTION TO AMERICAN HERITAGE ACT

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                      Thursday, February 13, 2003

  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 2003.'' 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. The proposed legislation is the same as we 
introduced in the 106th and 107th Congresses, except for advancing the 
effective date by a year.
  Since 1969, the law has provided that the creator of the artistic 
property is only allowed a charitable deduction equal to the cost of 
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 minimus. 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.
  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 law was changed 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. The situation has not improved over the years.
  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 and/or 
similar activities, (b) providing that the deduction can only be 
claimed in the year of contribution, i.e. the carry over 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

[[Page E243]]

to learn from the artist his/her 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. It could make the difference in a decision by the creator/
donor to contribute some of their created work to a museum or public 
library. That way important works are preserved and we all benefit. We 
urge our colleagues to join us in cosponsoring this legislation.

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