Of Gifts and Taxes

It seemed like only a minor clause in the omnibus tax-reform bill passed by the House of Representatives three weeks ago by the lopsided vote of 394 to 30 (TIME, Aug. 15). But it has museum officials from coast to coast up in outraged arms. The clause eliminates the tax-free status of art donated to museums--and thereby strikes at the heart of the way in which U.S. museums have been built. In Europe, the great museums, from the Louvre and the Prado to the Uffizi, house collections that were initially accumulated by kings and princes. Most are still supported by state funds. In the U.S., by contrast, museums began and have largely continued as communal institutions that relied on the generosity of private donors to make great art available to the public.

In the past, a collector who wished to give his Rembrandt to the Metropolitan could claim its current market value as a tax deduction. Unless the new law is amended before its passage by the Senate, the collector will have the dubious alternatives of a) deducting a work's original cost--rather a wrench if he had the wit to buy it 20 years ago --or b) claiming its current value and paying capital gains tax on the difference between that and its initial cost. Neither alternative is apt to encourage the philanthropic spirit. "Countless treasures that come to us under the present tax laws will be cut off entirely," says Perry Rathbone, director of Boston's Museum of Fine Arts.

In Manhattan, the Association of Art Museum Directors called an emergency session to mobilize opposition. The Ways and Means Committee inserted the provision chiefly because some donors in the recent past have claimed exaggerated values for run-of-the-mill works. The museum men point out that such abuses have been sharply curtailed since the Internal Revenue Service established an advisory panel of experts 1 1/2 years ago to help assess the fair market value of donated art. In 1968, the panel reviewed 500 donations and disallowed 25% of their claimed $20 million value. So far, not one donor has officially challenged their decisions.

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