I know I wasn’t alone when I heard the news last year that Francis Bacon’s triptych “Three Studies of Lucian Freud” had sold for a staggering $142 million at an art auction. Who could have been the buyer? Surely a Russian oligarch, or a Silicon Valley techillionaire. Turned out to be Elaine Wynn, the ex-wife of casino magnate Steve Wynn. (That must have been some divorce settlement.)
The next bit of news was even more unusual: Wynn, who lives in Las Vegas, immediately loaned out the painting for exhibition in . . . Portland, Oregon. Not the most predictable place for such an expensive piece of art.
But today the New York Times reveals the real reason for the circuitous route the art is taking: Wynn stands to avoid $11 million in Nevada “sales and use” taxes by loaning out the painting in another state first:
By shipping the painting first to Oregon, instead of her home in Las Vegas, the new owner, Elaine Wynn, may be eligible to avoid as much as $11 million in Nevada use taxes, though it is not clear whether she intends to take advantage of the break.
Collectors typically learn of this strategy only through savvy lawyers, dealers and auction specialists. But within the circle of people who know of the practice, it generates debate between those who appreciate how it fosters public access to art and those who suggest that such access comes at too high a price to unwitting taxpayers.
For example, do taxpayers in, say, California even understand that they have given up millions of dollars in tax revenue over the years to, in effect, underwrite the display of paintings in other states?
Just another indicator of how taxes are for little people (Trademark: Glenn Reynolds).
JOHN adds: Hmm, I see this one a little differently. No doubt Steve Wynn has paid astonishing amounts of taxes. The real break here is getting hundreds of millions of dollars (at a minimum) in a divorce settlement. Still, whether she earned the money in the first instance or not, I would rather see wealth in the hands of nearly any private citizen than the government’s. While taxes may be a necessary evil, tax avoidance (not evasion) is a positive good.
STEVE rebuts!: Hey, I’m for avoiding taxes by any (legal) means possible, so good for the ex-Mrs. Wynn. But my narrower point is that only the very rich are able to do this. Try it with a car or some other big-ticket product you buy out of state and see how far you get. It’s like the estate tax, too: I believe the Kennedy family has, over the decades, paid less than $200,000 in estate taxes. If we didn’t have special circumstances that very rich people overwhelmingly exploit, we might actually get some real tax reform.