Wednesday, July 23, 2014

Interesting Sales Tax Decision

(How often do you get to say that?)  It involves the dealer Richard Feigen.  He sold a painting in 2004 for $2.5 million and paid sales taxes of $215,000 to the NY authorities in 2005.  In 2011, it emerged that the painting was one of the Beltracchi forgeries.  Feigen refunded the purchase price to the buyer and applied for a refund of the sales tax.  The ruling of the New York Division of Tax Appeals:  too late.  The statute of limitations for sales tax refunds is three years from filing or two years from payment, and in either case it had long expired.  The decision is here.  The NYLJ has a story here.  Feigen vows to appeal.

Tuesday, July 22, 2014

Fair Use Update: It's still a mess

Sergio Muñoz Sarmiento flags a good student note in the Harvard Law Review on the Prince-Cariou decision. The bottom line:  "Because outcomes based on value judgments are difficult to predict, artists will struggle to conform their actions to the law ex ante, and the ultimate outcome may be a chilling effect on the creation of cultural products."  I agree.

Corcoran Update: Nine members of Save the Corcoran get standing (UPDATED 2X)

The Washington Post confirms.  The amusing thing about this one is that the Hall Monitors don't know how to feel about it.  On the one hand, they're against the proposed plan because they're against everything they care deeply about the principle of donor intent.  On the other hand, Save the Corcoran's plan to save the Corcoran involves selling a bunch of art to keep it afloat, which is the most appalling, repulsive, horrible thing anyone has ever suggested.  So they're in a quandary.

UPDATE:  A thorough analysis of what comes next from Kriston Capps.

UPDATE 2:  Capps is gunning to become the first journalist to join my Deaccessioning Hall of Fame.  (Peter Schjeldahl almost made it, but recanted his heresy before we could get the acceptance papers out to him.)  In a Twitter exchange with Christopher Knight, Capps says "There is good reason for Corcoran students to fear being absorbed by GW. Why not balance their future with non-essential works?" and then adds "Plainly, tactical [deaccessioning] can work fine."

Detroit Update: Pensioners vote in favor of Grand Bargain

Detroit Free Press story here.  This was as expected.  The real question is whether Judge Rhodes will force the other creditors to accept the deal:  "Unless the city reaches a settlement with the financial creditors — which would currently get anywhere from 0 to 10 cents on the dollar for their debt — Rhodes will have to decide whether to force them to accept cuts. The financial creditors argue that the grand bargain is illegally constructed to benefit pensioners and diminish the value of the DIA art. They want the city to consider a sale of the city-owned DIA or some of its artwork."

Monday, July 21, 2014

Who's left standing?

There appears to be some uncertainty about the results of today's hearing in the Corcoran matter.  Lee Rosenbaum reports that the AG told her standing was denied to "Save the Corcoran as an organization."  But Save the Corcoran as an organization tweets excitedly:  "Ladies & Gentlemen: We have standing. 9 of our plaintiffs were granted standing today. Trial starts Monday."

Saturday, July 19, 2014

"What makes a real Matisse better than a fake? What makes any original work or art more valuable and special than a copy?"

The Guardian's Jonathan Jones:  "maybe we are at last about to enter the revolutionary age Benjamin predicted, when reproductions become so good that originals no longer have any value."

Resale Royalty Update (UPDATED)

There was a flurry of coverage of the proposed resale royalty bill this week, centered around a hearing of the House IP Subcommittee on Tuesday.  The Art Newspaper's Julia Halperin says the bill is "gaining momentum in Congress."  More here from Artnet's Eileen Kinsella and here from AFC's Henry Kaye.  Nicholas O'Donnell has his usual helpful commentary here.  Despite all the noise, however, GovTrack still gives the bill just a 3% chance of being enacted.

I've been intending to write something more substantial about this issue (maybe if the chances of enactment rise to 5%, I will), but for now there's one point I'd like to make about the current version of the bill.  Though the "smart view" of the issue is that resale royalties are a terrible idea (for roughly the reasons expressed here), I think there are strong fairness-related reasons in support of the idea.  Christopher Rauschenberg had a Huffington Post piece this week where he talked about a work his father had sold to a collector for $900 which the collector later sold for $85,000.  Now imagine a similar example where the later sale was for $8 million.  That's the art world we find ourselves in today.  I think, in a case like that, most of us would have an intuition that that is deeply unfair to the artist and, all else being equal, if there were some way for her to share in that increase in value, that would be a good and just thing.  Now, that's not the end of the analysis -- all else might not be equal and there might be disadvantages to a resale royalty scheme that outweigh those fairness considerations, but I think it's at least worth acknowledging they exist.

But here's the problem with the current bill:  it caps the royalty at $35,000.  So in our example, where the collector sells the $900 work for $8 million or $18 million or God knows what, the artist gets ... $35,000.  I suppose you could say that's better than nothing, but I'm not sure it does very much to diminish the sense of deep unfairness that attaches to the transaction.  And, without that, the bill becomes a lot harder to defend against its critics.

UPDATE:  Sergio agrees:  "If the issue is 'fairness' and just desserts, then why set a ceiling?"

"Japanese Artist Megumi Igarashi Arrested Over Vagina Kayak"

"A Japanese artist who made a kayak modeled on her vagina said ... she was 'outraged' by her arrest and vowed a court fight against obscenity charges.  Megumi Igarashi, 42, says she was challenging a culture of 'discrimination' against discussion of the vagina in Japanese society."

"The current value of the trust’s art collection, Shniberg says, is around $125 million."

Bloomberg's James Tarmy has a lengthy, interesting piece on the Artist Pension Trust, which is getting ready to start selling some work.  I guess the proof will be in the pudding, but I've long been a little skeptical for the reasons Tyler Cowen articulated here.  Cowen's bottom line:

" ... decompose the transaction.  Half of your income stream remains tied up in your own art and thus risky, minus the [28%] of course.  With the other half of your pension you decide to invest in not-yet-totally-famous artists.  Would anyone recommend such purchases on their own merits?  Is that your idea of insurance?"

"Psihoyos's arguments are entirely without merit."

Interesting copyright decision from Judge Kaplan in the Southern District regarding rights in photographs of sculpture.  Let's just say he was not amused by the photographer's arguments.

Ain't it Grand!

The WSJ:  Detroit's Water Cutoffs Spark Protests.

Friday, July 18, 2014

Wring Wring

Had a chance to read the D.C. Attorney General's brief in support of the Corcoran's cy pres request.  You can read it here.  I'll be very surprised if the relief isn't granted, but two things in particular jumped out at me as interesting.

The first is how heavily the AG leans on the deaccessioning taboo to support his position.  One of the arguments the Save the Corcoran folks make is that the museum doesn't have to close, it can sell some art to raise the money it needs to stay alive.  Oh, says the AG, if only that were possible:  unfortunately, doing so "would likely result in a loss of accreditation, and would dramatically undermine the Corcoran's reputation within the museum field."  We saw the same thing with the Barnes Foundation; they could have sold a very small number of works and raised the cash they needed to stay put.  But the big bad Deaccession Police, with their non-nuanced black and white view of deaccessioning, and their sanctions, always with their sanctions, made that impossible.

The other thing worth mentioning again -- and this is another point of similarity with the Barnes, where the entire collection remains intact and hung exactly as it was in the original location, only in a spiffy new building five miles away that's more accessible to a greater number of people -- is that you have to work pretty hard to find something seriously objectionable about the ultimate outcome here.  What will happen if we don't "save the Corcoran"?  According to the AG, the following:

"Although the proposed transactions will disburse the Corcoran's art collection to multiple museums and institutions in D.C., ... the art will remain in D.C. and accessible to the public.  Moreover, public access to Corcoran artworks should actually increase under the proposed transactions.  The art will  now be exhibited at the National Gallery, at [the Corcoran's] 17th Street building under the 'Corcoran Contemporary' name, and at other museums and institutions in D.C., which should increase the amount of Corcoran art being exhibited at any given time.  Moreover, the public will have free access to the Corcoran's art at the National Gallery and other museums and institutions ...."

In addition, the 17th Street building will continue always to exhibit work.  "This term was a necessary condition of the District's support of the Corcoran's proposed transactions, as it ensures that the 17th Street building will continue to be a 'Public Gallery and Museum' in D.C."  The building will also continue to house the Corcoran School, which will now become part of George Washington University and be known as the "GW Corcoran School."

The hand wringers will wring, because that's what they do.  But no one should really be losing any sleep over this.

Thursday, July 17, 2014

Grander and Grander

The Detroit Institute announced yesterday that it has raised another $27 million towards the $100 million it pledged to contribute to the so-called Grand Bargain solution to the city's bankruptcy.  (They keep rolling it out drip by drip and I have to say the suspense is killing me.  I wonder if they're going to make it to one hundred.  It's a real nail-biter.)

Meanwhile, while I was away last week a new appraisal of the museum's collection showed it could be worth as much as $4.6 billion.  This was mostly pooh-poohed by the anti-sale side, and one method of pooh-poohing is seen in this piece by Kriston Capps.  "Ultimately," he says, "selling Detroit's art will do more for deficit reduction than for alleviating suffering."  The idea is that the money from any sale will only go to line the creditors' pockets, rather than to suffering Detroiters, and since there is an easier way to get rid of the creditors (Judge Rhodes can just stick it to them), why touch the art?

That may be so, but the more interesting question, I think, is:  what if it could?  What if it could alleviate suffering?  That's the question economist Scott Sumner addresses in this post.  He points out that "5% of $3.7 billion is $185 million a year, the annual income that ... could be generated by the midpoint of the Detroit art wealth estimate. What else could be done in Detroit for $185 million/year, forever?"  (Or, as Michael Rushton puts it, "in thinking about the ownership of a significant collection of art by Detroit (or any city), the opportunity cost of the capital should be taken into account, along with all the other costs and benefits of preserving the collection in that place.")

So yes, in this particular case, a sale of art may not do anything to alleviate suffering (other than perhaps the suffering of the creditors!), but what about cases where it could?  What about the university or museum that could be saved from closure through a sale?  Or, sticking with Detroit, Sumner also points out that they "could sell a handful of the most valuable paintings for $1 billion and keep the museum mostly intact." (I made a similar point here.)  What then?

Or does a billion dollars not do much to alleviate suffering these days?

Tuesday, July 15, 2014

Tweet of the Day

Actually it's from yesterday, but I'm still catching up after a week away.  From philosopher Nigel Warburton:  "Users of slippery slope arguments should take skiing lessons - you really can choose to stop."

Someone tell the Deaccession Police.  Having given up on the public trust argument, this is all they've got left.