COMMENTS ON THE ART MARKET
Droit de Suite – What is That?
This is a phrase that will begin circulating more and more as time goes on and one that will have an effect on certain works of art. Currently droit de suite (a tax on the resale of artwork by a living artist or who has died less than 70 years ago) is only being charged in a few countries in Europe – France and Brussels are among them. As it stands now, when a work of art is resold, the artist, or their estate, receives between 3% and 5% of the selling price. It is also important to note that even if a work is sold at a loss, the tax is still imposed! These payments are typically made to copyright collecting agencies on the artist’s behalf. Proponents of this tax feel it properly rewards artists whose works once sold for very little and now sell for large sums of money.
In January of 2006 droit de suite will be instituted in the United Kingdom (UK) and it has many people in the UK trade worried. At its inception, the tax will only be charged on works by living artists, but by 2012 it will include all artists whose works are still in copyright. The UK will use a sliding scale that begins at 4% for works sold between 3,000 and 50,000 Euros and will max out at 8,600 Pounds Sterling for works sold in excess of 500,000 Euros.
A number of studies calculating the impact of this tax on the artists and/or their estates have been conducted in Europe. One showed that if the tax was imposed on all of the eligible works sold in the European Union in 2003, 81% of the proceeds would have gone to the artist’s heirs and not the ‘struggling’ artists. It also showed that many of the eligible artists/heirs were already fairly wealthy and that those in real need of the funds … the current struggling artists … received little or no benefit.
The powers that be, or should I say those who want to be, in the United Kingdom are also aware that since there is no such tax in the United State (well, except for California which I will discuss shortly) sellers will be more likely to send their works that are subject to this tax over here to be sold.
As I just mentioned, in the U.S. only the State of California has a similar tax - called the California Resale Royalties Act - which took effect in 1977. This Act stipulates that 5% of the selling price will be given to the artist, however, the artist must still be living; the work in question must have sold in excess of $1000; and most importantly, the work sold for more than its original selling price.
Now, getting back to Europe -- let’s not forget about those agencies that need to be set up to collect the tax; funding for them will come from the tax monies collected. Current estimates are that between 10% & 40% of the funds will go towards administration costs. So, after expenses how much money will end up in the pockets of the ‘struggling’ artists? My guess is very little. The way I see it, the only living artists that will truly benefit from this tax are those whose works are already selling for very high prices. But then again, what do I know?
I am not taking sides on this issue as arguments both for and against have their merits; however, in my opinion the biggest winners will be the agencies who collect the tax … and let’s not forget the governments, who will collect taxes on the tax!
In the end it is important to keep in mind that as of today, droit de suite only exists in some European countries and only relates to living artists or those who died after 1934 (70 years from the time I wrote this article). So those of you who are collectors/buyers of 19th century works have little to worry aboutJ!!
It will be interesting to see if the implementation of the tax has any real impact on the Contemporary resale market in the United Kingdom.
The information used for this article came from a number of sources including a story in the February 26th issue of the Antiques Trade Gazette, the Caslon Analytics web site (www.caslon.com.au) and the Artquest web site (www.artquest.org.uk).
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Dogs Playing Poker
I know you have all seen these in your travels … images of dogs playing poker … some of which have been reproduced on black velvet! Well, did you know that the original works of art were created by the New York artist Cassius Coolidge (1844 – 1934) for the advertising firm Brown & Bigelow? Probably not, nor do most of you really care, but I think you will find the following of interest.
In 1903 Brown & Bigelow commissioned Coolidge to create 16 works featuring dogs in humanlike situations. Of the 16 pieces, 9 featured them playing cards. Well, this past month two of the original paintings were offered for sale at a New York auction. The pair titled A Bold Bluff and Waterloo carried an estimate of $30,000 - $50,000 (fairly robust if you asked me). When the bidding war was over, a New York collector plunked down $590,400!
It will be interesting to see how many of the remaining 14 works will find their way to the market now. I know that if I had one, I would be a seller. Oh, and just in case you were wondering, even if the driot de suite tax was in effect in the United States, Coolidge’s heir would have missed out since he died in 1934.
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Money Makes Money
A recent sale in Texas highlighted the real strength of the dollar … or should I say of some ‘old’ dollars. A firm in Dallas offered for sale 2,024 items of currency and the results were astounding. To begin with, they reported that they had a 100% sale rate … every item offered found a buyer and among the more amazing results were the $368,000 paid for a $50 1861 Interest Bearing Note; the $253,000 paid for a $10 1878 Silver Certificate; $299,000 paid for a $100 1863 Interest Bearing Note; $299,000 paid for a $500 1861 Interest Bearing Note; $241,500 paid for a $20 1905 Gold Certificate and the $241,500 paid for a 1928 Federal Reserve Note that had a face value of $10,000 (this same item sold just a few years earlier for $121,000).
And for those of you who have jars containing old coins … here is one that may make some of you check your personal stash. In late February a 1792 copper penny was sold in California for $437,000. This was only the 9th known piece in existence and had been stored in a tobacco tin for many decades.
This is a great illustration of what we have all been told … money makes money!
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Another Crook Caught
It was recently reported in the Maine Antique Digest that Dr. Vilas V. Likhite, a former Harvard professor, was arrested in Los Angeles for allegedly selling a fake Mary Cassatt to undercover agents for $800,000. At the time of his arrest they also found works purportedly by de Kooning, Pollock, Johns, Hofmann, Brancusi, and Laurencin. This is not the first time Likhite has been in trouble with the law. In 1985 he was sued in New York, accused of a $600,000 art forgery and fraud; and in 1989 he was convicted of selling fake works by Daniel Ridgway Knight to an individual in Belmont, Mass.
One more disturbing fact, Dr. Likhite’s medical license was revoked in 1989 by the Massachusetts Board of Registration in Medicine for gross negligence. It appears that he was injecting patients with experimental drugs. This really makes one wonder about our legal system.
Howard L. Rehs
© Rehs Galleries, Inc., New York – April 2005
Gallery Updates: New works by Antoine Blanchard, Edouard Leon Cortès, and Sally Swatland have been added to our web site this month. We have also activated the ‘Printable Version’ feature for those works featured in our Online Inventory. Now, from the large version of each image, you can click a link and it will create a page that can be easily printed.
Among the many paintings that found new homes since our last newsletter were: Sir Lawrence Alma-Tadema’s On the Steps of the Capitol; Federico Andreotti’s Spring Blossoms; Edward Portielje’s Afternoon Tea; Theophile Duverger’s Brotherly Love, Henry H. Parker’s The Thames at Pangbourne; Edouard Cortès’ Gare du Nord and Café de la Paix; Sally Swatland’s Surf at Little Compton and By the Water’s Edge; and a great photograph by Ansel Adams titled: Clearing Winter Storm, Yosemite Valley (1944).
Virtual Exhibitions: We are beginning an upgrade of the biographical information on some of the Virtual Exhibitions. Over the next few months you will see longer bios for some of the current exhibits and we will be adding new exhibitions.
Next Month: Not sure yet … but I will come up with something!