Revised Trump Tax Plan
Since May, there have been many adjustments that have been made to foreign and domestic policies in the US. One major development has come with President Trump’s new tax plan and the administration’s efforts to try and eliminate the estate tax. The removal of this tax could have an effect Americans and art dealers, collectors, and those working in this industry more widely. The impact of the removal of the estate tax is a topic we’ve covered before but now we’ll take a look at the effect of the latest Trump tax plan on the art market.
While the specific details surrounding the changes of the tax are still evolving, a proposal released by the Trump administration on September 29th sought to further layout the plan. The ambitious plan is seeking to overhaul the American tax system and would do away with the estate tax as well as there being fewer individual tax brackets; there would be three as opposed to the seven that are currently offered. With this new plan, the corporate tax rate would be 20% from the now 35% as well as the rate on individual tax rates could drop to 35% from 39.6%. This new plan has left people divided across the political aisle, and still leaves many important questions unanswered. President Trump has claimed this proposed plan will make filing taxes easier and is an attempt to rework a sometimes-confusing system.
Impact on the Art Collectors
Part of the confusion stemming from the potential adjustments this plan would present is based on the validity it has so, the larger effects of the Trump ax plan on the art market remain to be seen. Trump’s tax plan outlines changing the tax rate for small businesses. This possible adjustment could impact the way art is bought, sold, and distributed, from the standpoint of collectors, dealers and art buyers. The proposal the Trump administration released however does not currently address how inherited assets that have appreciated value would be handled.
With the potential elimination of the estate tax, this would affect wealthiest Americans, and those who buy and collect art. When It comes to the buy and selling of art works, these are assets that tend to be held onto given the way they appreciate over time. Another way to handle this would be to donate or put art pieces in a trust for people’s heirs. Other elements that the current proposed plan might offer could make it easier for art collectors to keep their assets within their family. Although the Trump administration claims this plan will help to jumpstart the middle class, there are still many unknown factors. The Trump plan would allow for a standard deduction that would double to $12,000 for single filers and $24,000 for married couples.
As the tax code stands currently, the first $11 million dollars of an estate is exempt for married couples. With the potential elimination of the estate tax this could mean that art collections could now be easier to keep within a family resulting in possible interesting effects on the art market. If art works remained in private home collections, this could potentially slow the sale of art works entering museums, gallery spaces and other venues.
Effecting the Wider Art Market
The impact of the Trump tax plan on the art market could also be felt by auction houses where the large sale of major works is typically conducted. With the current speculation surrounding the way it could have an impact on the art world overall, there are still many issues that are open to debate. While this new tax plan would greatly benefit the wealthiest buyers on the art market, the larger implications are that people would continue to hold onto their art assets.
In terms of museums and other charitable organizations there is still much to be determined. However, if the current loopholes for such buyers are left in play this could potentially be a good thing for the art market. However, with many moving parts such as the way Congress will vote to potentially disseminate the plan, and the ways in which this would trickle down to the various parts of the market. This could also potentially stimulate the art economy resulting in more sales all around.
While it is hard to determine what will become of the estate tax and the overall effect of the Trump tax plan on the art market, it is something that is evolving. While these elements continue to be worked on a political and social scale people inside and outside of the art world are anxious to see how this what will become of the estate tax and the Trump tax plan.
About the author: Anni Irish has been a contributing writer to several online publications including Boston based publication, The Dig, New York Arts Magazine, and ArteFuse among others. She holds a BFA from the School of the Museum of Fine Arts/Tufts University, an MA in Gender and Cultural Studies from Simmons College, and an MA in Performance Studies from New York University.