The federal rules that restrict artists from getting a fair deduction for donating their original works is closely tied to one of the lesser known controversies surrounding the presidency of Richard M. Nixon. While the Watergate scandal remains a pivotal point in American history, it was Nixon’s handling of his pre-presidential papers that first got the commander-in-chief in hot water and ultimately became tangled in the Tax Reform Act of 1969, which screwed over generations of artists to follow. Unfortunately for Nixon, he was just following in the footsteps of his predecessors.
As outlined by archivist Matthew Brown in his article “The First Nixon Papers Controversy: Richard Nixon’s 1969 Prepresidential Paper Tax Deduction,” those who found themselves in the nation’s top seat were pretty careless with their personal documents until the 1970s when lawmakers started making major progress in ensuring that presidential records were preserved as a matter of public record. While our earliest leaders were free to toss their correspondence in the nearest open fire, presidential papers were declared to be public property in 1974.
Leading up to that point, presidents Lyndon Johnson, Harry Truman, and Dwight Eisenhower had deeded their papers to the government to become part of the National Archives, which became the de facto expectation for America’s leaders. According to Brown’s research, “Tax deductions for such gifts enticed prospective donors who otherwise would have sold their papers to collectors. Presidents Truman, Eisenhower, and Johnson had benefited financially from their annual gifts to the National Archives. Johnson described this routinized process to his successor Richard Nixon shortly after Nixon’s election in November 1968.”
As Nixon was easing into his presidency, he was ready to hand over a stockpile of personal documents to the National Archives for safe keeping — and like his predecessors, he expected to earn a sizable deduction for his contribution. For tax purposes, Nixon’s papers were appraised at $576,000 — exceeding his annual income and leading to the president of the United States only paying $792 in taxes in 1970.
Driven by what they saw as presidents gaming the system and profiting from what was perceived as public property, Congress had begun working to pass the Tax Reform Act of 1969, effectively closing the “loophole” that allowed creators to claim the fair market value for their donated work. Under the current rules, the best an artist can hope for is a deduction for the cost of materials used to create the work. For Nixon, this meant his personal correspondence would go from a value of $576,000 to the cost of the paper on which it was written. According to an article written by Emma Kleiner of Stanford Law School, the 1969 amendments to the tax code led to a dramatic decline in art donations.
“For example, in the three years prior to 1969 the Museum of Modern Art in New York received 321 donations from artists, but in the three years after 1969 the Museum received only 28 donations from artists. Strikingly, the Library of Congress, which customarily received around 15 donations from authors per year, received one donation in the four years after 1969,” Kleiner wrote for the Center of Art Law.
As far as Nixon is concerned, his administration fought the changes to the tax code — not so much to help charitable artists, but mainly so he could rest a little easier around tax time. Nixon ultimately signed the Tax Reform Act on Dec. 30, 1969. It would be another four years before Nixon’s staff was found to have not submitted his charitable donation in time to beat the cutoff date to receive the old deduction that came his way. Of course, by then he already had that whole Watergate problem to worry about.
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