What Would Importing Droit de Suite to the U.S. Mean for the Art Market?
The contentious push for the United States to adopt droit de suite, the legal right for artists and their immediate descendants to receive a modest cut from secondary-market sales of their art, is being revived on Capitol Hill, with high-profile advocates again campaigning for Congress to follow Europe in embracing the law.[content:shareblock]
Back when Senator Ted Kennedy spearheaded a 1986 drive for droit de suite as part of the Visual Artists Rights Act (VARA) — which granted such "moral rights" to artists as the right to attribution, to publish anonymously, and to maintain the integrity of their work even after it is purchased — opposition forced the resale rights to be dropped before the bill could be passed. Now, according to the Art Newspaper, the Artists' Rights Society and former UnitedStates Patent and Trademark Office commissioner Bruce Lehman are leading the charge, with the main difference between the law they're lobbying and previous iterations being that, this time, droit de suite would only apply to auction sales, not gallery sales.[content:advertisement-center]
So, what would it mean for the U.S. art market if droit de suite was made into law?
One could look to the European Union, where droit de suite for living artists has been in effect since 2006. In 2012, Britain andother EU countries originally exempt from enforcing resale rights for artists dead less than 70 years will be required to enact the full version of the tax. But in an opinion piece also published by the Art Newpaper, artist Frank Stella — the temporary president of the International Council of Creators of Graphic, Plastic and Photographic Arts — points out that droit de suite laws in Europe have thus far proved ineffective because there isn't yet a critical mass of countries with a similar right, allowing sellers to easily bypass the law by taking their art elsewhere. The art market doesn't respect national boundaries, so laws have to be global (or nearly so) to be effective.
Stella contends that the creative rights for visual artists are far behind those for other creative professionals in the music, film, and computer programming industries, with the art world's little guys getting cheated out of their due royalties. But opponents of the legislation say that the tax will only really benefit established artists who command top prices without the tax. Academia, for instance, is littered with economic papers stating that droit de suite hurts the struggling artists that it is meant to protect. Victor Ginsburgh of the Universite Libre de Bruxelles argued in a 1996 paper entitled "What Is Wrong With Droit de Suite: The Economic Arguments" that the possibility of having to pay a penalty for reselling a work will cause buyers to demand lower prices across the primary market. Since lesser-known artists generally don't see a significant amount of their works resold, they will never see any extra revenue from the secondary market.
The artists who would profit from this are artists like Stella who are already established superstars in the art world. (A quick look at our Art Sales Index for Stella's secondary market work brings up more than 1,500 hits, including 23 works which have resold for over $1 million.) The vast majority of artists, on the other hand, would see their earnings decrease.
Stella contends that the prices that auction houses already charge both consignors and buyers don't do much to deter buyers, so a few more percentage points on the sale price won't hurt the market. That argument, of course, assumes that buyers and sellers don't adjust their bids and asking prices with thought to the high fees charged by auction houses.
One of the most powerful arguments used in opposing the law in Europe, however, does not have the same resonance across the Atlantic. In Europe, particularly in Britain, the worry is that droit de suite will cause capital flight in the art market. A tax that exists in London but not in New York may causesellers to choose to consign in the U.S. rather than in Britain. Since London will have a droit de suite tax by 2012, if New York were tohave a similar tax, the only art hub left in the world would be China. Considering the cost of transport and insurance for an expensive fine artwork against the relatively small amount of tax, moving consignments to Hong Kong or Beijing would make little sense.