The ISF and Art Works : A (Poisonous) Sea Serpent

In a repetition of the past, a Parliamentarian, and Socialist budget committee spokesman, Christian Eckert, has suggested including art works in the ISF (Wealth tax), which is why we are republishing the editorial we wrote a little over a year ago when this question came up again for the umpteenth time.
We do not have much to add to our text, except to say that Christian Eckert, writing in total earnestness, that art market professionals "will not be concerned" and that "this does not mean taxing culture", shows that he does not come anywhere close to understanding the subject. When adding that "the budget returns would probably not be very considerable in fact", he also proves that he is acting in a purely ideological way, deliberately ignoring the dramatic consequences described in our article below.

More serious still is that, given the current economic context, after several Parliamentarians on the political right expressed their support of the project a year ago, the proposal may just be voted in. Whether or not it passes, its incessant return to the forefront of fiscal policy discussions has already wreaked its damage, making it practically irrelevant if it actually becomes law. Art collections continue to leave French soil or will become definitively anonymous. This measure is impossible to apply (how will art objects be evaluated ?) and will bring in an insignificant sum, imposed only out of a hate for "culture" and for the "rich", thus completing a process initiated by the government and well on its way in a matter of just a few weeks : a debacle for the art market and a far-reaching disaster for our museums.

Charles Le Brun (1619-1690)
Hercules Defeating Diomedes
Oil on Canvas - 60 x 45 cm
Bayonne, Musée Bonnat-Helleu
Is part of the important bequest left by
Jacques Petithory to the Musée Bonnat
(at the time the collection was not
subjected to the ISF)
Photo : RMN

A bit like the question of deaccessioning museum collections, the proposal on including art works as part of the wealth tax comes up periodically for discussion. This proves, once more, the absolute incompetence of some of our leaders in the artistic domain and/or their total lack of interest in national heritage.

The fact that Le Monde published readers’ letters expressing their criticisms (issue dated Friday, 4 March 2011) may be seen as acceptable, though we were surprised to see that the newspaper did not place them in context with no example as to the disastrous consequences of such a measure. But that political figures of presumably high standing like Jean-Louis Borloo (recently rumored as potential Prime Minister for the Sarkozy government) present this proposal again (when in fact the latest point of discussion is that of eliminating this wealth tax) is indeed distressing.

Even if certain heavily burdened tax payers choose to invest in art works in order to avoid this compulsory payment, something which has not been demonstrated as yet, we should be happy they do so. Developing private collections in France is instrumental in helping the art market grow, directly linked to the enrichment of national heritage (see our editorial of 1/12/10). Collectors make donations and leave bequests to museums, they may also pay their taxes through "acceptance in kind" (in fact, at times precisely in the case of the ISF). In the long run, an art work has more chances of ending up in our public collections if it is still in our country, not if it has gone abroad.
But above all, applying such a measure would have extremely serious implications. By creating a tax on ownership of art works [1] - the only country in the world as far as we know - we would be inexorably accelerating the flow of art treasures from our country’s heritage, no doubt in an irrevocable manner. Exporting paintings, sculptures, drawings or antique pieces is the easiest thing in the world in France. Even if we exclude art works, we must admit that the ISF itself as it stands already today has encouraged this process pushing some taxpayers to move abroad - and there is no denying it as we personally know of many - to Belgium, England with their art among their personal belongings. In the future, those who choose to stay, assuming that their collections have not been exported, will keep them to themselves, being careful not to lend them out for exhibitions, to have them studied or published by art historians. The French art market, an economic activity with potential profits, would be deeply affected by such a measure.

Our statements here have been repeated by others as well. Notably by the Senate, in the words of Yann Gaillard (UMP), the author of an information report for the Commission des finances, entitled : "Marché de l’art : les chances de la France" The art market : France’s chances (April 1999). We reproduce below, in full, the paragraph on the wealth tax for its realistic common sense :

"a) Set aside once and for all the application of the wealth tax

The "hate of art", the title of a controversial article concerning the question of contemporary art, corresponds perfectly to the motive driving those who wish to include art works in the wealth tax.

It has been extensively demonstrated that such a tax, which is hard to establish given the volatility of prices, would not bring in any significant revenues and would cause the works to leave, already held generally in the foreign residences of important collectors. Mr. Jacques Thuillier, a professor at the Collège de France in an article of the Revue administrative (N° 306) entitled "L’art et l’ISF, bêtise pas morte" [Art and the wealth tax, a foolish idea is still alive], uses all his rhetorical talent in denouncing this tenacious attack on "the entire sector, hateful for two reasons, as a symbol of an aristocracy of intelllect and money, and as a non-productive investment".

In fact, taxing art works does not seem to be justified on an economic, technical or budgetary level, in short as ineffective as it is dangerous :

• On an economic level, we should remember that art works do not generate revenues and thus, this tax might, given the definition set down for it by the Conseil constitutionnel [the equivalent of France’s supreme court], turn out to be confiscatory ; to this we should add the argument that the price of art objects does not necessarily increase as shown in a spectacular manner by certain investment funds, such as the Fonds BNP Arts, despite its expert advisers ;

- On a technical and pragmatic level, we can see that such a measure might incite tax evasion, as only the most virtuous citizens would pay ; this evasion could be in the form of simple dissimulation, or else a transfer outside of the country ; in any case, collectors would have to be very naive to continue lending to exhibitions. Furthermore, one can imagine the number of evaluations which will be contested since prices are particularly volatile and because there is a very fuzzy line between what constitutes a decorative object as opposed to a functional one ;

• On a budgetary level finally, we can only agree with the Ministry of Finances in underlining the very low impact of this tax and also prove that given the sales no doubt resulting from this type of measure, the State would have to either sit by helplessly as works leave the country or else be forced to purchase them immediately when it might have benefited from donations if given more time.

Mr. Jacques Thuillier is extremely emphatic in pointing out the difficulties ensuing from the obligations imposed by this tax in exchange for an exoneration, particularly that forcing tax payers to exhibit their works to the public for an annual six-week period :

"We do not know whether to cry or laugh. What does exhibiting their works to the public mean ? Would this be an exhibition in a museum ? The idea is unfeasible. There are not enough museums in France to exhibit in the space of one year, given their small rooms, even a hundredth of the works held in private collections, and who would take care of transporting and insuring them ? Should they open their apartments to the public ? We can imagine families taking turns for six weeks a year to "hold an open house - allowing burglars to stake out the premises and pick out what interests them... Or are these Parliamentarians so backward in their prejudices as to think that collectors who pay the ISF all own a château with a household of servants ? Why should we trust persons with such little experience ?

There is an even more grotesque aspect to the question. It seems that art works whose authors are still alive would be exonerated in order to avoid discouraging creativity. Should a collector check to make sure of the artist’s birth date before acquiring a work and ask about his health ? Should he inquire if the artist died the year of the purchase to avoid being accused of fraud ? Should he sell off the paintings the day an artist dies or else have his taxes raised ? Will we see the works on the auction block at Drouot the week following an artist’s death, thus bringing down prices ?"

In concluding, Mr. Jacques Thuillier quotes Mr. Deydier to further emphasize the scope and consequences of the threat, saying that the latter is right in writing "The fiscal attack, once again aimed at collectors, affects and might destroy the weakest point in the delicate and very sensitive art world. The triad made up of art dealers, collectors and museums is vital for our cultural heritage. If one of these elements is destroyed, it will all disappear, since each category in fact is totally dependent and inseparable from the other two." He adds : "My Anglo-Saxon colleagues have kindly pointed out to me that, whatever the result of the voting, the constant return of the same and useless ideological debate in the news transforms it in fact into a permanent sword of Damocles hanging over the French art market, which will eventually have the same effect [...]. Do we want France relegated to a purely provincial role in the world art market with an irreparable impoverishment of our cultural heritage ? This is where we are heading."

The late Françoise Cachin told us just recently at the end, that when François Mitterand created the Impôt Sur la Fortune, he finally renounced including art works. This was thanks to the decisive intervention of one person, who convinced him of the grave consequences of such a project, none other than the minister Pierre Joxe [2]. The fact that a person from the political left understood that ideology could not justify such abuse, and that thanks to him this disastrous measure was avoided is highly symbolic. There should be a bipartisan consensus on the matter. Excluding art works from the wealth tax is not a rightist or leftist policy, it is simply indispensable. The opposite, not to mention that it would cost more than it would bring in, would be above all another in the long list of crimes against our national heritage.

This article was published for the first time on 4 March 2011 (except for the introductory heading).

Version française

Didier Rykner, mercredi 10 octobre 2012


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[1] It is already hard to believe that France continues to tax imported art works as if they were a manufactured product which increases our trade deficit.

[2] We had mistakenly written that it was Jacques Ralite. We know that he is deeply concerned in protecting national heritage. However, Pierre Joxe’s role in this matter is not known to most.

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