Monday, September 18, 2006

Understatement of the day

The Free New Mexican had a story this weekend on the recent changes to the fractional gift rules with the following headline: "Tax-law change might discourage art donations."

In fairness, the article itself goes a bit further ("some say [the change] will effectively end the practice called 'fractional giving'"), but, like most other press reports on the change, it focuses on the requirement that the gift be completed within 10 years, rather than on the more serious problem -- the tax bite to the collector from any increase in value of the artwork over time.

There is one error near the end of the piece. "Congress," it notes, "accidentally wiped out an earlier provision in tax law that allowed artists to donate their own work and take a fair-market deduction." That change, in 1969, may or may not have been bad policy, but it certainly was no accident. See, for example, this statement from Senator Leahy last year ("Congress changed the law for artists more than 30 years ago in response to the perception that some taxpayers were taking advantage of the law by inflating the market value of self-created works").