Statement Of Sen. Patrick Leahy,
 Introduction Of The Artist-Museum Partnership Act Of 2007
February 12, 2007

Mr. President, today we reintroduce the “Artist-Museum Partnership Act,” and once again I am pleased to be joined in this effort by Senator Bennett.  This bipartisan legislation would enable our country to keep cherished art works in the United States and to preserve them in our public institutions.  At the same time, this legislation will erase an inequity in our tax code that currently serves as a disincentive for artists to donate their works to museums and libraries.  We have introduced this same bill in each of the past four Congresses.  It was also included in the Senate-passed version of the 2001 tax reconciliation bill, the Senate-passed version of the 2003 Charity Aid, Recovery, and Empowerment (CARE) Act, and the Senate-passed version of the 2005 tax reconciliation bill.  I would like to thank Senators Cantwell, Cardin, Cochran, Coleman, Conrad, Dodd, Domenici, Durbin, Feinstein, Kennedy, Kerry, Lieberman, Sanders, Schumer, and Stevens for cosponsoring this tri-partisan bill.

Our bill is sensible and straightforward.  It would allow artists, writers, and composers to take a tax deduction equal to the fair market value of the works they donate to museums and libraries.  This is something that collectors who make similar donations are already able to do.  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.  If we as a nation want to ensure that works of art created by living artists are available to the public in the future – for study and for pleasure – this is something that artists should be allowed to do. 

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.  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.  Losses to the public like this are an unintended consequence of the 1969 tax bill that should be corrected.

Congress changed the law for artists more than 30 years ago 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 our 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 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 and 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 recipient’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.

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 will make a crucial 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. President, with unanimous consent, I ask that this statement and the bill text be included in the Record.      

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