On tax deduction$ and their exaggerated benefits?

A big Sunday story by LAT Pulitzer finalist Jason Felch and Doug Smith finds that the tax-deduction-overvaluation of art donated to museums may be rampant. More importantly, this issue is Sen. Charles Grassley's (R-Iowa) latest focus. You may remember Grassley from "The Lawrence Small-Smithsonian Scandal" and "Are American Universities Using Their Endowments Wisely?" In other words, this is a story worth taking seriously.

But is Grassley really on to something? Maybe the better question is: What percentage of all charitable donations of objects are overstated? I'm thinking about non-cultural objects such as people who donate beat-up, old used cars to NPR stations and such.

I asked Felch that and he said that in previous legislation Grassley & Co. had recently tightened up tax laws in areas such as lemons, and that art was effectively next in line for Senate examination.

That said, I still cringed when I read this quote from class warrior Robert Reich in the LAT piece:

Reich, an economist and former Secretary of Labor in the Clinton administration, recently argued that charitable donations that do not directly benefit the poor, such as art, should be eligible for only half their value in tax benefits.

"We've created a giant loophole right now through which the rich reduce their taxes by supporting culture palaces frequented primarily by themselves," Reich said in an interview. "This is not the way the tax code was intended to be used."

Hogwash. First, Reich's answer suggests that only foodbanks have value to a society, and that only foodbanks should be the beneficiaries of a nation's support.

Furthermore, if there is data to suggest that museums are primarily visited by their wealthy donors, I sure haven't seen it. (Museums such as the Baltimore Museum of Art and the Nelson-Atkins are free to everyone, which has significantly changed their demographics. And many contemporary museums are free.) For thousands of years human cultures have made, supported and preserved cultural objects of importance to them. Apparently Reich thinks we should be different.

Aside: Museums do a great job of leaving themselves open to this argument when they charge $15-20 for admission, start charging groups of school children for admission, and then market themselves as tourist destinations and as being primarily in competition with Major League Baseball for 'entertainment' dollars. As I've written here before (and here), contemporary art museums especially must do a better job of building their audiences and establishing their broader relevance.