Rostenkowski Eases Objection to Full-Value Art Deduction

WASHINGTON — The chairman of the House Ways and Means Committee has relaxed his opposition to extending a temporary tax law that permits people giving art objects to museums to deduct their full value at the time they are donated.

The decision by U.S. Rep. Dan Rostenkowski (D-Ill.) may open the way to permanent--and even expanded--tax law revisions sought by arts groups for more than a year.

The Rostenkowski decision was disclosed here Friday at a meeting of the National Council on the Arts, the advisory board to the National Endowment for the Arts.

A spokesman confirmed that the congressman, who wields enormous power over tax legislation in the House, had “apparently moderated” his position on the art-object deduction issue--which has been a source of controversy for the nation’s museums and arts institutions since 1986.

The change in position by Rostenkowski may ease considerably the prospects of extending a one-year restoration of the deduction--enacted by Congress last October as a result of frantic negotiations to reach agreement on a package of changes in the tax code that became law late in 1990.

Before 1986, a person who gave artwork or securities to a charitable institution could deduct from his or her taxable income the appraised value of the art or securities at the time they were donated. The provision was a huge tax windfall for the donors (mostly wealthy people), since they had usually paid far less for the items than they were worth when the gifts were made.

But in tax reform statutes passed in 1986, the appreciated value deduction was wiped out. Deductions were limited to the amount that the donor had actually paid for the works--even if they had been purchased decades before they were given to museums. Museums, cultural institutions and universities claimed the action cut down on donations. Museums contended that the tax change prompted many artworks that they would otherwise have received to be sold privately--often overseas.

Last October, a House-Senate conference committee agreed to restore the deduction--but only for 1991. A measure to make the deduction permanent again is pending in Congress.

An aide to Rostenkowski and NEA officials said Friday that the legislator had agreed not to oppose the restoration--provided that arts organizations and NEA Chairman John E. Frohnmayer propose ways to find revenue to replace what would be lost by permitting the deductions to be taken. Rostenkowski, NEA officials said, estimated the revenue loss of deductions for art objects alone at $40 million over the next five years.