A Law of "Unintended" Consequences? United States Federal Taxation and the Market for Modern Art in the United States

Abstract

This article aims to explore a to-date little considered nexus between U.S. Federal taxation and the American art market. Lacking so far in an increasing body of studies of the relationship between tax policy and the arts is a discussion of impacts which Federal taxation might have had upon the American art market for modern art rather than arts sector more generally. The scope of this article is two-fold: first, to posit a nexus between Federal revenue codes and the systemic structure of the nascent New York market in the mid-twentieth century; second, to explore how the radical tax reforms of the 1980s impacted on the New York art market and collector preferences. In relation to this, this article will explore two cornerstones underpinning Federal taxation: first, the tax-exempt status given to non-profit institutions; second, the charitable deduction allowed against Federal tax (personal income tax, estate tax) liabilities as part of the American ethos of indirect giving.

Keywords

• taxation, United States, Federal government, Revenue Code, income tax, estate tax, charitable deduction, tax reform, AMT, art market, museum