Economist Tyler Cowen weighs in on the issue, raised by Daniel Grant in the Wall Street Journal last week, of the proper capital gains rate for sales of art. He rejects the argument, attributed to a couple of folks in the Journal article, that lowering the rate would shift investment to art at the expense of "more productive things," like factories and apartment houses: "The recipient of the money, the art seller, can invest the money just as well as the spender might have."
On the other hand:
"There is a good argument for the higher tax rate on art, namely that art yields otherwise non-taxable pleasures -- the pleasure of hanging it on your wall -- unlike say holding Chrysler stock. Or you might think taxing art is another way to hike the tax burden on the rich. But the cited argument just doesn't fly."
In somewhat related news, the Art Newspaper reports on a new tax that could affect collectors in the U.K.