57 Tax concessions

Introduction1 Taxation measures aiding the donation of gifts or bequests to the arts are applied on a major scale in the United States. Some of these measures have formed the cornerstone of government policy towards the arts in the United States since the beginning of the twentieth century and they are defended vehemently to this day. In contrast, while such measures exist in some countries in Europe they have rarely been used on any significant scale. Despite this, there are many who call for more of a United States-type tax policy in Europe, and such calls appear to have increased in number and volume in recent years. There have, however, been trenchant criticisms of the US tax policy measures in relation to charitable contributions as they apply to the arts, the most authoritative and comprehensive of these being that by Feld et al. (1983). Despite the force of the arguments to the contrary, few involved in the arts or policy making in the United States appear today to question this tax policy as a means of channelling public money to the arts. Weil (1991) in particular, in an elegantly argued piece, defends these tax policies over direct government grants and bemoans the diminution of the scale of the tax incentive resulting from tax changes in the United States. Simon (1987) also defends tax concessions over government grants in a very comprehensive review of the tax treatment of non-profit organizations in the United States. It must be noted, however, that there are tax expenditures on the arts in Europe which, although much smaller in magnitude than those for charitable contributions in the United States, and more elusive, are fiercely defended by the arts communities there and apparently matter greatly. In particular the concessions in relation to value-added tax (VAT) have been subjected to considerable public debate. Besides this, the important property tax exemption is prevalent in both Europe and the United States.