Sunday, September 29, 2019

Elder Abuse for Art and Profit

Elder abuse is usually either physical (neglect and mistreatment) or financial (emptied bank accounts, purloined securities).

In the case of creative artists, there's a third possibility. Reports regarding two celebrated names in the art world, both of whom gained celebrity in the age of Make Love Not War, suggest that abuse may consist of seeking to profit from an artist's name and reputation – his brand.


Robert Indiana's "Love" first appeared on a 1962 Museum of Modern Art holiday card. Recreated  in paintings and sculpture, it became an immensely popular icon of the 1960's. Indiana, however, found celebrity uncomfortable. Eventually the artist fled from the pressures to commercialize his work by retreating to Vinelhaven, an island off the coast of Maine. There he died in May of last year, frail and isolated at the age of 89.  

In his final years Indiana appeared to lose his distaste for commercialism. A new work
resembling his Love sculpture appeared on the cover of a wine magazine. A giant sculpture of the letters BRAT showed up in front of sausage factory.

Last winter the NY Times reported that a company owning rights to sell designs based on "Love" has gone to court, accusing the artist's caregiver and an associate of "taking advantage of Mr. Indiana’s advanced age and isolation on a remote island off the coast of Maine to produce a bunch of inauthentic works that they sold under Mr. Indiana’s name."

In August, the executor of Indiana's estate, his former lawyer, charged the caretaker had stolen many artworks and more than $l million from Indiana while allowing the wealthy artist to live in squalor and filth.


Peter Max created trendy psychedelic posters for the Make Love Not War generation.
His works seemed to be everywhere, partly because his style was widely imitated. Although Max is now an octogenarian suffering from Alzheimer's, his artistic output appears undiminished. His studio, run by his estranged son and associates, produces Peter Max works that sell briskly on cruise ships – so briskly that one cruise ship is itself adorned with a Peter Max design.

But cruise passengers may be buying works that are Peter Max in name only, according to the Times:
The scene played out for years. Twice a week, in the late afternoon, above the Shun Lee Chinese restaurant on the Upper West Side of Manhattan, a creaky elevator would open, and out would step an elderly man. Thin as a rail, with a sparse mustache, he would sometimes have little idea about where or who he was. A pair of security doors would buzz unlocked once surveillance cameras identified him as the artist Peter Max.
Inside, he would see painters — some of them recruited off the street and paid minimum wage — churning out art in the Max aesthetic: cheery, polychrome, wide-brushstroke kaleidoscopes on canvas. Mr. Max would be instructed to hold out his hand, and for hours, he would sign the art as if it were his own, grasping a brush and scrawling Max.
Nevertheless, sales of works signed Max continue, aboard ship and on land.
Putting an ailing artist's name on works made by others and sold for profit certainly seems abusive. Yet in today's art world, who knows? 

Artist Damian Hirst (remember his shark in a tank?) happily admits that only a couple of dozen versions of his "Dot" paintings were created by him. To meet perceived demand, he had his assistants turn out more than a thousand more.

Sunday, September 22, 2019

This Tax Deduction Does Matter

Tax deductions don't matter after the Trump tax cuts? Well, that depends on the deduction.

Although far fewer taxpayers were able to claim deductions for mortgage interest or charitable contributions on their income tax returns for 2018, home sales and charitable donations seemed to survive unscathed.

Because of the expanded standard deduction, use of the SALT deduction for state and local taxes also declined. What's more, upper-income taxpayers who did claim the deduction couldn't claim much – the deduction was capped at $10,000 per couple.

As a result of the cap, income-rich residents of New York, California and other high-tax states now have an added incentive to pull up stakes. According to estimates cited by The Wall Street Journal, a Manhattanite couple with income of $500,000 could save $50,000 in state and city income taxes by moving to a no-tax state such as Florida. Californians with $500,000 incomes could save more than $46,000 by establishing residency in no-tax Nevada.

Connecticut, Merrill Anderson's home state, is feeling the pain. (A hypothetical $500,000 Connecticut couple might save over $32,000 in taxes by becoming Floridian). High income Wall Streeters flocked to Connecticut in recent decades, a migration encouraged by the destruction of the World Trade Center. Banks built huge trading floors in Stamford. Hedge funds flocked to Greenwich.

Then came the great recession. Connecticut's role as Wall Street East began to fade. High-income financial types have been leaving – a few involuntarily. Most have departed in search of friendlier tax climates.

 Like Florida. Especially the Palm Beach area.
Kelly Smallridge, president and CEO of Palm Beach County’s Business Development Board, told FOX Business that more than 70 financial services companies have moved into Palm Beach County within the last three years. Currently, the organization is working with another 15.

“I cannot keep up with the number of companies coming in,” Smallridge said. “Some are headquarters, some of them are regional operations. Many of them, once they get here, within short order establish [Palm Beach] as their home base."
 
Firms are primarily coming from three main areas – New York, Boston and Connecticut (specifically Greenwich).
As Greenwich and Connecticut have discovered, extremely-high-income-people aren't willing to remain sitting targets for state and local taxes. They and their advisers are adept at sheltering wealth from taxation. That's something for Elizabeth Warren to keep in mind if she's able to pursue her idea for an annual wealth tax.

Monday, September 16, 2019

A Corporate Executor and Trustee is Worth Fighting For

Real estate bigwig and philanthropist George Kaufman changed his will shortly before his death, removing his longtime lawyer as executor and trustee. Now the lawyer has gone to court, claiming the changes are the result of elder abuse by Kaufman's wife.

Kaufman's will divides his estate among various individuals and creates a charitable foundation. The final amendment designates Bessemer Trust as executor and trustee.

The choice of a trust company, The Wall Street Journal reports, has drawn the approval of New York State officials:
The office of New York’s attorney general, which supervises charities in the state, has supported Bessemer, calling it a “disinterested, neutral corporate fiduciary.” The attorney general’s office accused [the lawyer] of being motivated by his own financial interest and holding up the creation of the charity.

Saturday, September 07, 2019

Income Tax Deductions Don't Matter

The Trump income tax cuts abolished personal exemptions but greatly expanded the standard deduction. That meant most taxpayers could gain nothing by itemizing their mortgage interest payments or their charitable contributions. Without these tax breaks, some predicted, home prices would plunge and charitable contributions would shrivel.

Sure enough, far fewer taxpayers claimed itemized deductions on their 2018 returns.

But so far, Felix Salmon points out, the economic impact of those lost deductions has been nil:
Only 8% of taxpayers now deduct mortgage interest, yet home prices continue to rise,  with no indication that the new law changed anything at all. 
Similarly, the charitable contribution deduction has had no visible effect on charitable contributions. Total giving rose by 0.7% to a new record high in 2018, despite a late-year stock market plunge.