The Statement for the Record is submitted on behalf of the Association of Art Museum Directors (AAMD). AAMD urges inclusion into H.R. 7 of H.R. 1598 the “Artists’ Contribution to American Heritage Act of 2001” introduced by Representatives Amo Houghton and Ben Cardin. The Senate passed an identical companion bill (S 694) last month. The legislation will allow artists, writers and composers to take a fair-market-value deduction for works of their own creation, which they donate to an appropriate non-profit institution. As a result of the 1969 repeal of the law, artists, writers and composers now can only deduct the cost of materials should they choose to contribute a work of art to a cultural institution.

Since the 1969 repeal, many works of art, which would have been contributed to American institutions, have been sold into private collections or abroad, in effect depriving the public of these works. For example, Igor Stravkinsky planned to donate his papers to the Music Division of the Library of Congress the month the Tax Reform Act of 1969 was signed into law. Instead, the papers were sold to a private foundation in Switzerland.

The Library of Congress itself was determined to suffer the greatest loss of gifts. In the few years prior to 1969, the Library of Congress received annually about 15 to 20 large gifts of manuscripts from authors; in the four years ended 1974 it received a total of only one such gift.

A change in the law would encourage artists to make donations of their creative works to appropriate charitable institutions and also motivate charitable institutions to actively seek contributions of works from artists. The public would benefit by having important creative works available in their institutions. The benefit that would be achieved through the enrichment of charitable institutions by providing an incentive to visual artists, writers and composers to make such gifts cannot be overemphasized. Finally, by encouraging visual artists, writers and composers to donate works to appropriate public charities located in the United States, more of the cultural patrimony of the United States would be kept in the country and made accessible to the American public instead of going to foreign collectors or museums.

H.R. 1598 has been carefully structured to safeguard the American public against excessive valuation or abuse. The safeguards include:

Works of art must be created at least 18 months prior to the date of contribution by the artist. The artist must have previously publicly sold, performed or exhibited similar works.

The artist must obtain a written appraisal of the fair-market value of the work by a qualified appraiser, and the appraisal must be attached to the artists' tax return.

The use of the work of art shall be related to the purpose of the institution that receives it. (For example, a painter could not contribute a painting to a non-profit hospital and take a fair-market-value deduction.)

The artist can only take a deduction against income earned and related to the art. (For example, a painter who earns a substantial portion of his/her income as a musician, can only deduct the fair-market value of a painting donated to a museum, from the income earned from painting or a related activity, such as teaching art, but not from the income earned as a musician.)

The artist can only take a deduction against the income earned in the year the gift is made.

Important regional, ethnic or culturally specific institutions cannot ask artists doing significant work in an area important to the collections of their institutions to donate works of art. Most artists earn very little and cannot afford to donate. And museums, libraries and archives, in most instances, do not have funds to acquire such works; they must rely on donations. As a result, they are losing works important to their public.

H.R. 7 the “Community Solutions Act of 2001” is an appropriate vehicle to include H.R. 1598 the “Artists’ Contribution to American Heritage Act of 2001” since it already includes several important bills offering tax incentives to increase charitable giving. The inclusion of H.R.1598 extends to America’s cultural institutions the possibility of significant contributions from living artists at very modest cost.

The Joint Committee on Taxation, in a letter received by Representative Houghton on May 23, 2001, estimates that the cost of H.R. 1598 will be $50 million over 10 years. The gain to the nation will be inestimable.

We urge you to include H.R. 1598 in the "Community Solutions Act of 2001".

We thank you for your kind consideration.