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This scam is as old as time, but it was used on people, you take a nobody from the streets, put him through good schools or the right circles and get him elected as president, than you can re write the tax code in your favor or history for that matter... get a country to start a bunch of stupid "social" programs, increase spending thus borrowing, then bankrupt a country from within... Medici family for instance took a pirate and made him their puppet pope that's how they grew so much...
An artist is not an everyday person. They are rare. Any one can be trained to create existing masterpieces. Trained to paint what a photo can paint now. So how is valuing an artist who may create something most rare and hard to reproduce a crime? Or unfair? To hold such a high value on something created by an individual who may not ever create that same piece again shows intelligence. Each flower is different, but each have qualities that make it a flower. One who appreciates a flower sees the miracle of life, thus understanding no pile of money can replace the miracle of existing. Existing to see and feel what art expresses to the individual. For most art may be a scam and id bet they rarely have good art in their homes. Art should be valued At the highest level for creating something to envoke a feeling or to release a feeling and then having an impact on another is one of the highest orders of magic humans can experience. What a trove of magic those hidden galleries, those safety deposit vaults. If art or humanity should be lost, these vaults of art hold the key to our glorious humanity rising back to a creative and godly state of being. Instead of all the other ways humans can be that are not creative.
Excellent video. One thing is missing from this : not only these people get to save heaps on their taxes, but, unlike other tax evaders, they also get to pass as philanthropists in the media.
That's not all, they also foist their terrible "art" on whatever charitable institution of choice they have, and then that's what goes up on the walls and the public goes to see at museums. Thereby people think that this is the best that current artists can do and lament the state of art and how garbage it all is. While in addition forcing out artists with actual developed skills and beautiful art, this is an important part, because you don't want to deal with the costs and difficulties of finding such a person, nor do you want those works to stand in comparison to the garbage which would start to give lie to the whole set up.
I went to art college and always felt they didn't at all prepare us for the art world. There wasn't even one lecture on connecting to galleries. Now I wonder if they just didn't want to tell us that this is part of the deal of being involved in this industry: shady insider deals and tax scams. Oh and by the way, your art might just end up in a warehouse if you make it big.
Ya art schools care more about teaching you to express your emotions through finger painting and throwing paint splatters on canvas rather than actually teaching technique.
@@000bullets That wasn't my experience. Their teaching was more about facilitating and developing your ability to talk about your work. At degree level they're not going to teach technique because you learn that in the Foundation year and you work more independently. That's how it was for me anyway. :)
As someone who used to do taxes, this makes so much sense. I also agree that it's super unethical and am in no way saying this is a good thing, but they basically came up with a way to essentially donate millions to charity without actually spending that amount. It also explains why a lot of "modern" art goes for such stupidly high prices; I had always wondered the reason for that.
The thing is, because they've artificially inflated the price, doesn't mean whoever they donate to will be able to sell it for that price. Sometimes, the charity is left with a painting that on paper is worth a lot, but they may not ever be able to sell.
Catherine , not quite. As they can be used later down the track too. Its when that artist is dropped cos of a lack of talent or experience. That artist then cannot sell as those initial works are set at such a price that they may never sell again.
As an artist, I was walking out of the Lyme Art Association last week after dropping off a few pieces for jurying. As I gazed at the hundreds of gorgeous works sitting there, done by local, mostly unknown artists, I was blown away by the vision and talent just in our small area of the world. Tears came to my eyes because of the wonder of man’s giftedness, and the limited access to the beauty that is produced. We used to know that in order for a human to develop successfully, he must be able to function with both sides of his brain. The right side, creativity, has been systematically allowed to atrophy for the last 80 years , by first taking art and music out of the schools, which actually are an important form of recreation for the human and gives him appreciation for personal accomplishments. Children are discouraged from the arts by parents who pronounce “there is no money in it”. BUT the hobby should be maintained, as most people end up in a job that does not fulfill on many levels. Even our architecture has become square mostly boring boxes compared to the large ornate structures from hundreds of years ago. We spend our time watching other people being “creative “ on tv. Our halls and buildings should be covered inside and out in beauty. Our children should be encouraged to express themselves and have joy and spread it to others. Art and music are food for the soul, whether we are able to make it or appreciate it.
"Children are discouraged from the arts by parents who pronounce “there is no money in it”." We discourage pursuing the arts for our children because it's filled with pedophiles and sex predators.
@@bearkowlbama6352 ….I have been a dancer and visual artist in my life, and have only had to deal with a few situations, luckily nothing serious. Some of my family were devious, so I learned to know and avoid certain situations. I think the top artists may have to compromise if they are dealing with the big guys in the field. No one is completely safe anywhere, we have to develop discernment.
@@cmwHisArtist You are right, no one is completely safe anywhere. However, when one is trying to avoid ant bites, standing on an ant nest isn't the best choice.
@Yanami 873 Yeah, it's very similar to the puppy market. A friend of mine finds puppies that are undervalued, buys them and then convinces a few of his "friends" that they are really valuable, then gets an "expert" to tell everyone: "this is a really valuable puppy" and then he sells it for a huge profit. He then takes that profit and buys more puppies. He currently has about 1000 puppies and doesn't pay any tax.
@TrustWithin That's what pisses me off the most. The most garbage art is some of the most expensive art and the people in the "art world" are the most snobby and clueless people when it comes to art.
As a practicing artist myself, for whoever watching it, I can give some inside view. One of the big no no for fresh artists are not increase the price of your art too fast because price your art ideally should never go down but up. So when situation in video mentioned happened, the gallery and collector basically try to squeeze as much juice as they can from the artist until the price of artist work no longer get higher and no longer can sell.Both of parties get profit from the work and they will just abandon the artist. Since your art can’t get low but high, you basically stuck in this situation that no one will buy your work because of high price and there’s nothing you can do.
I never knew it was this corrupt but always had an idea. As someone who grew up around the art world it never made sense to me how an artist that can paint essentially a banana was deemed more marketable than someone with more profoundly obvious talent. Thank you for making this video. Love your new journalistic approach to your content. Subscribed to newsletter and shared.
Hi Sorelle, you should do a video about how churches are also used for tax evasion, one example is Kris Jenner who founded a church and all her daughters "donate" millions of dollars to this church which they use to write off their taxes, I'm interested to know if this is done worldwide by the ultra rich.
In the US (I can't speak about other countries) a tax deduction does not work quite like she seems to describe at 6:50 in the video. What she is describing seems to be a tax credit. In her example, the deduction reduces the taxable income by the $9 million she mentions, not the tax liability, which is the amount owed. Since the top federal income tax rate in the US is currently 37%, the savings on federal taxes would be more in the range of $3 million. A caveat here is that some states have high income taxes as well. In California, it's about 12%. So a person living in Los Angeles might be facing a total tax rate of 49% and the tax saving would be about $4.5 million.
So glad to see this comment, exactly what I was thinking while watching that part of the vid. I think it's the same way in Canada too. Charitable donations deduct from taxable income, not directly from taxes owed.
I kind of view it the other way around. The only people scamming us is the government. It’s a literal armed gang. Naturally, said gang wants your money, you know, since it doesn’t actually produce anything of wealth. These “art investors” are just trying to protect themselves from being robbed. Here’s a radical idea: let’s get rid of taxes and these things will disappear.
They aren't scamming "us" they are scamming the tax collector's. This is why tax laws should be as simple as possible, because it leaves less room to maneuver around.
@@terencestamp3225 perhaps we need broad discussions about the definition of ‘government’. Currently, the government is said to be full of big business cronies who set laws that favour the wealthy with their ever-expanding pockets and proportionately decreasing tax contributions with the remaining ‘fools’ (You, me and Bob The Builder) footing the bill. Is that bill for us larger because we’re covering the shortfall the rich have dodged? The concept of fair and just governance is what civil society means. Perhaps the key is ensuring that genuine democratic government is in place with effective balances and checks in order to keep the playing field level. Alternatively, eradicate taxes for those on salaries and tax property ownership? I’m not sure the idea of ‘the rich are just protecting themselves’ is a good excuse when these rules for the wealthy can’t be used by ordinary people unable to pay substantial backhanders for what is nothing more than a legal ruse.
I'm not sure this works the way you're saying it does. In order to book a 10m loss, you'd need to increase the book value of the asset to 10m, therefore having a capital gain you'd have to carry. Without the cap gain, you'd only be able to write off the 250k. So essentially, you'd be spending 250k to receive a write-off of 250k. Also, your deductible donations are limited to a % of your gross income. I can't remember what the limits are though.
I worked for a woman who ran an art magazine. She found artists, bought their work then promoted the hell out of them. The art goes up. Donate inflated shit to charity and write it off. Rinse and repeat. However much she said it was worth was 100 % her call. Literally printing money by decree.
@Dave did you watch the video? It explains exactly this. They're donating a piece of art worth much more than what they paid in order to claim a tax write-off. This means that they "profit" by not having to pay taxes on the amount of money they "donated". They are lowering their overall taxable income without actually giving away that money. AKA legally evading taxes.
@@JamesPhillipsOfficial well it must be significant enough that it’s worth it, or else they wouldn’t do it. Also I’m sure there’s more at play here that we don’t know.
@@JamesPhillipsOfficial That's the scam though, no one's actually going to pay that inflated "valuation" from the "appraiser", it's a fake price but the valuation is considered valid by the governments, once it's donated
This is how Salvador Dali became "famous" too. His wife Gala promoted him in the NY art world. Dali was so outrageous......photographers took many pictures of him with models, at high end social parties, and even walking his cheetah down to the subway station. It's all so crazy.
This goes even deeper. The ENTIRE world of fine art is predicated on one individual or institution reinforcing an opinion of another in a reinforcing loop. As to witch artists are successful and who are, usually based on who you know and who you blow, to use the vernacular. It's an entirely fictitious world created out of whole cloth, and the quality of the art is never a factor.
I’ve been into art my whole life. I agree. Trying to break through if you’re no one seems like an impossible task. And in so called ‘art community of love and rainbows’ it feels so revolting to me. That’s why all the good things are always in the dirty underground, hehe.
The local museum in the large city I live in has a contemporary art curator who only gives opportunities to young male artists who are willing to have affairs with him. It's not even a secret. Everyone knows (including his wife), but there's nothing anyone can do about it. He's the "authority" with the degree and connections.
I work in this industry, low level.. this explains so many weird things I’ve encountered! Similar things are done in High end real estate to launder lol
This has been around forever. I remember when Van Gogh's Irises sold at auction for about 50 million to a billionaire in the late 80's. This was over 30 years ago and set a record for a Southbeys auction sale. Alot of the details in the deal were hidden and turns out he actually didn't have the money, was lent about 27 million by Southbys, and eventually the painting winds up in the J Paul Getty museum. One of the most important paintings of the post impressionist period stamped with the "None of the publics business" heading. Art world in a nutshell. I graduated with an art degree and had discussed some of the bizzare exhibits at the Chicago art Institute with friends. I told them they were there as tax write offs for rich people. While people stood in front of a giant black canvas for an excruciating amount of time trying to connect with the artist the gallery waited patiently for the day they could pull the garbage off their walls after satisfying the donors requirements. At the time it was mostly known artists who could convincingly be justifiably overvalued by the museum appraisers. A one million painting being valued at 15 million. My friends were incredulous. The entire concept too far fetched. Yet, there are the perplexing exhibits, the stores of paintings in the museums basements that will never be seen, and the otherwise self centered selfish uber rich falling overthemselves to donate priceless works to museums who just don't have the wall space to exhibit them. You bet. Has to be something else.
@@InkandFish555 OK. While everything is realative, not everything is worthless. Was it worth over 53 million? Of course not. What fifty million can do to relieve the needs of those in want is immeasurable. The fact that rare historical things appreciate in value is a fact. The fact that old masters sell for less than some modern art is a good reason for cynicism. It just hurts a little to see poor ol Van Gogh dragged into it.
@@nalvarado65 The point is, he's only historical and important because a conspiracy of people in the art world made him so. He was a failed and forgotten artist in his own time and by his self assessment. Like a lot of the artist from the late 19th and early 20th centuries that have been dug up and deified by the art establishment and constitute a lot of the content of university courses.
As an artist who lost the use of my right arm from overwork doing 400+ mostly sizable detailed fine art pieces in my life, with 4 solo exhibitions at our Central Bank etc. I always knew of the fraud in art prices, yet it's nice to hear this 'how it's done' description.
I have a friend who also lost the use of their right arm due to painting too much. They actually used their left hand to control the brush but would "touch themselves" with their right hand at the some time. I guess that is just one of the unspoken risks of being an artist.
As an art appraiser I can tell you that a major thing you are missing is that the irs audits any donation over 50,000 and a group of three experts are on this panel. The irs is well aware of these schemes and appraisers do net get paid six figures to appraise a painting and there is also no such thing as a certified appraiser
Excellent, thank you. I listened to an interview with an art critic about 10 years ago. The host of the show asked " What makes one artist great and another one not" The critic who was as smug as they come, responded "Hot air"
This was indirectly brought to my attention at an art gallery during a trip to Las Vegas when I struck up a conversation with one of the sales reps. The pitch wasn't so much to sell me on buying a $30,000 painting for an up and coming artist who had more buyers for his work than he was capable of producing paintings for, but that I could use the painting as a business tax write off by putting it on display in my work office. That was literally the pitch.
As a person who spent some time dreaming sweet illusions about this whole scene, thinking about being part of it - I felt something stinks and changed direction of my life. I found out years later what it was about, and I must say I am grateful for that gut feeling.
ART Consciousness Excellent presentation. As an artist myself, I was both horrified and disgusted by how this scam works when I first discovered it. I realised that the rich had essentially highjacked the world of art, and by doing so had corrupted the natural evolution of art itself. If money becomes the main motivation of art then it becomes something else, not art. It becomes a commodity and thus a product. That is not why I went to art school and university in the first place. For me art is not a product. Art is not about selling, it is about having something to say that's worth telling. The moment money gets involved it will automatically corrupt it. Therefore I decided some time ago to make sure my art never gets into the hands of someone playing this tax scam game. I only sell to those whom I can see genuinely love the work. What is interesting in all the art scam game of art collectors, is that the collectors are now complaining that the art of today has become boring and repetitive. They say the artist must do something about it. They say they are waiting for the next Picasso but there is none in sight. What these greedy manipulators fail to see is that it is they who have created the environment in which a new Picasso can not emerge. Art evolves because the artist responds to something that affects their psyche not because how much someone pays for their art.
Art Consciousness: The myth that Picasso was a great painter was created by the same so called modern "elite" (social engineering/ugly is beautiful, etc.). Mockery of true art. It reminds you of the fairy tale "the emperors new clothes". A new Picasso can´t emerge? Look at the paintings and drawings of very small children, they are no different. But can you call it art?
Please more on this topic! It has always intrigued me. What makes it a perfect scam is the beautiful shroud it is wrapped in. You are supposed to love art and pretend you appreciate it, otherwise you’ll be accused of not having either a heart or a brain. Few people have the self-confidence so profess they just don’t get why a certain piece is a big deal. If they did, this wouldn’t have been as easy of a scam.
Does it not seem very coincidental that crypto has very similar qualities? There is nothing tangible in crypto, it only has value as long as the next sucker wants it. The prices are ridiculous… Just saying.
You forgot a few things in my opinion. First a lot of art these days is bought by foundations and not directly by the billionaires themselves. This helps with legitimacy, public opinion and you can base your foundation in another country than the one you live in. I am missing a lot here but there could are whole theses about the use of art foundations. About freeports let's not forget two things, first most famous art appreciates over time so it´s a great way to turn new money into old money wile avoiding the depreciation of currency. Moreover it produces artificial scarcity so the more pieces from an artist are hidden in a freeport the more his avialable pieces might appreciate. Finally private sales within freeports can help the art pieces appreciate without ever going to the open market, preserving the scarcity. Expensive and/or famous art gets bought stored in whatever warehouse in geneva, gets traded a few times between collectors and foundations, comes out 10-20years later and gets auctioned for 5-10x the price it was bought for.
My art history told us about this at college while some of us that were working on projects after class. It was very eye opening about how a lot of the art world works in the "high end". Great video laying it all out.
Here for the elevation of Sorell’s Pedagogical [art of teaching] skills. Sending you all the positive vibes, May your creative reservoir always be in the path of the deluge.
Geez……I’m just amazed at how well Sorelle is able to grab your attention and keep you engaged, and simplifying the message. No question that she’s an attractive woman, but she’s charming and communicates in such a way that there doesn’t seem to be a trace of a negative attitude (jealousy, judgment, etc.), although she is still able to call dishonesty what it is, but with total objectivity. Fun to watch and learn….definitely must subscribe!
This is a complete bs that is talked about a lot and it doesn't work like that. If you are donating something of value X, for a tax write off, you get tax write off for the price YOU PAID FOR, not the value at the point of donation. If it was at the value at the time of donation, you would be paying taxes on the difference, hence not saving any taxes (but paying same amount anyways). And this is without adding in that state actually limits how much you can donate and get a tax write off... and to make it even more complicated- when you getting a tax write off, it doesn't mean you are not paying taxes of that amount (which you donated), it only means that the donation isn't getting taxed. So for example if I am taxed at 10%, and I donate 10$, that doesn't mean I now don't have to pay 10$ in taxes, but it means I won't have to pay 1$ (10% of 10$)... so I am not saving anything there.
Hi Sorelle, loving your videos. This is why I got so disillusioned at Art School, that and being terrible at art... You should do a show on NFTs, the not-so-secret art scam.
@@internettoughguy Wow! That is something else... I guess people will do damned well anything to make money, regardless of the morality of it. That's too bad.
@6:49 You haven't saved $9,750,000 in tax, You have reduced your taxable income by $9,750,000. Most countries have a maximum income tax rate of around 50%, Capital gains tax is usually less than that. The increased value of the painting would be capital gains. So, the max tax savings would be about $500K. Here in the USA you can only deduct the purchase price of the item and you have to have a receipt. You could donate the painting to a charity auction then you could deduct the price it sold for from your taxable income.
And there's also Hunter Biden..................... funny how he became an "artist" at exactly the same time his overdue tax bill was going to be paid. I'm curious how many of his pieces were "donated"
Wow, an Eye-opener for me!!! I knew it was wrong to have these super-inflated art markets, but never looked into anything! It's a good feeling to have real people enjoy your work for a realistic market value!
Thank you! As artist and curator I know exactly what you are talking about, but.. This happens in many industries, but in Art it is very blatant indeed.
A serious flaw in your logic: Institutions don't just accept donations of art that has been artificially hyped in terms of reputation and value. Even free donations come with a massive cost to the institution: insurance, storage, scholarship and research, inevitable restoration. So, any institution that has longevity as its goal would be prudent in terms of what it accepted. Institutions are run by, or are answerable to, boards who would scrutinize bequests and donations. Many people on these boards would not have hands in the art market, but would definitely have their own reputations to protect. Them signing off on whimsical acquisitions would be career suicide. So, maybe, if you're going to make such sweeping yet serious allegations, you should have more quotable proof? Or are you just retreading 'Adam Ruins Everything'?
Famous art collector buys pieces from art school graduates, meaning that they instantly become notable artists and the pieces are now worth millions. Some years later, the warehouse in which this "art" is stored mysteriously burns down. Hello, insurance payout that could buy you a nation. Not at all suspicious!
This is a live replay of the classical fairy tale "The Emperor's New Cloths" and explains why something that is at best is mediocre gets classified as "fine art". The "experts" need only declare that the art is outstanding for the gullible that don't want to be seen as the only ones that can't see the Emperor's cloths, to swallow it hook, line and sinker.
You deserve more views and followers. I was just having a conversation about this with my husband last Sunday. I will send it to him now! Thank you for making this video!
Wow, such a cool and eye opening episode! Thank you Sorelle! I’m an artist, and now it makes so much sense why a crappy painting that doesn’t take too long to produce can worth millions of dollars! However, I would like to be discovered by one of those billioner art collectors 😂
Tatiana you may need to start licking or sucking up to specific people in the so called art world then. You need to be as cunning, deceptive and conniving to get in. Even then you won't ever get into the inner circle of corruption. As Sorelle states in the video multi-millionaire Radcliffe had a "hard" time as stated in the video, but I reckon he's right in there now. He's absolutely been schooled on how to keep his millions away from the taxman via fine art.
My friends Dad, was the painter Wayne Theibaud. His paintings are pretty valuable, and he was sickened by this whole racket… during his late years, he started painting clowns, as he knew they would be a hard sell in the gallery world. 😂
This is the sad reality. So much talented art goes unnoticed, while garbage gets the spotlight because the artists have sold out and are in the same circles of these tax frauds
You speak truth. I used to house share with a group of very hard working, very intelligent artists. None of them made it, and they all went into other careers. Its a rigged system where arbitrarily investors and galleries will pick people and propel them to stardom. It is entirely non-meritocratic. One female artist mysteriously got very successful after spending some "quality time" in the toilets with a famous art buyer at a gallery show. Becoming a super famous artist probably has more in common with the casting couch and onlyfans, than any romantic fantasy about living the life of an artist. Btw did you realise you and the Turkish actress Beren Saat look like siblings?
I was JUST talking about this yesterday with my family- my dad has worked in the art industry forever and has gotten almost no gold that he was promised, after years nad years of work. I'm sure only 1% of the art in circulation is legit. There's so many interesting documentaries about this.
First, if you donate $10 million in art; that's 3-5 million in tax savings (not 10 million like she claimed in her example.) Second, you can only reduce taxable income by 1/3. So, if you have a $15 million dollar tax bill; donate $10 million in art and you'll only have $10-12 million in a tax bill. Second, her claim that you can't buy a picasso at auction because Daniel Radcliffe couldn't buy a painting from a dealer; Radcliffe called the artist and got the painting and anyone with cash can buy at an auction (they might check bank balances if everything is $50 million and reporters are trying to sneak in, which would take up seats that buyers might want.) Finally, I'd love to interview publicists and find out if they can make a nobody into a star for $100k/year. I do know that OJ must have a good publicist as he seems like a nice guy who killed his ex wife, but anyone who knows him has nothing nice to say about him when their friends ask what he's like (again, he must have a good publicist; but people are already asking in that case.)
What people also don't get about it is that, you also lost the money you donated. It's not like it made you money, you're OUT $10 million dollars. People always love to say how rich people can just "write it off" like it means it's something that is the greatest benefit. Many times, you have more money in the bank paying after just paying the taxes vs some large donation or business loss.
@@cchavezjr7 you're not doing the math. In this scenario, the buyer is not losing $10MIL because they bought the painting at only $10K so they're "only" losing $10K PLUS what they paid to have it promoted (a couple $100K). So they're GAINING money in tax write offs from the donation. And as the person above said, the amount they get from tax write offs is not exactly $10MIL, it is a portion of that. But STILL they are GAINING money not losing it.
@@cchavezjr7 The painting is essentially worthless. No one is going to pay 10 million for it. The only way to milk some money out of it is to donate and write off your taxes.
This has to be the same type of scheme driving the NFT BS! I know these celebrities' "millions" spent on NFT's could just be relatively small to their "fortunes." But I also have the suspicion that these celebrities aren't stupid enough to spend these "millions" on such ignorance.
Too funny. Same thought occurred to me about halfway through. Sad really.. the origin of crypto was too free people from the banking system but in the end it just became a scam.
As an artist entering the 5 figure price range for my originals, I'm reminded by videos like this that I still need to raise my prices!! 🤣 The shady depths of tax scams are deep, but I think any artist can admit to the desire of wanting a millionaire as a collector. Hopefully, they would actually display it, instead of it growing old in a storage warehouse. Great video, you might like the Netflix documentary called "Made You Look" 👍🏾
You should know that it's who you know then. The quality of the art is actually irrelevant. Which explains why the majority of expensive art is literally rubbish and the critics spout waffle in praise of it. High profile Tax Scams.
They are turning art into an elite thing, and are making the artist become a product. One of the big question raising here is: what is art? What is it for? None of that nonsense, that's for sure!
@@marionlecrayon7357 It's been that way for decades Marion, if not Centuries... Do you think the Mona Lisa was created for the enjoyment of the "so called" peasants of that Era ? There are many down to earth examples, but the Elitest aspect of art has existed for centuries...
This was super interesting. One question, though: If artificially turning these "up and comers" into famous artists is all a scam, why are people later on buying their work for tens of millions of dollars. Surely folks that spend that kind of money on art are aware of this, right?
That is a very simplistic version of a scam that is much broader and deeper. The artist's that get recognition do so because they are complicit in the racket. Fine art auctions benchmark and set the value and convert canvas in to a transnational non taxable Liquid asset that can be stored, used in lieu of cash currency and liquidated, borrowed against with just a discreet phone call. Shares without the cares, to use an insider expression. The museums only get a framed copy to validate the asset and claim the deduction. The originals stay with the owner. But the real value of the art is hidden beneath the paint. Information. Very valuable Information. Incriminating, technical, blueprints etc.
Great video. I would love to speak with you further about this. 8:47 - Many works of art are stored in freeports (particularly in Europe) to avoid VAT, Value Added Tax. But there are also political and personal reasons a collector may not feel safe having their assets known to their country, or to their greedy family. 9:00 - I recommend my own book (shamelessly) - The Bouvier Affair: A True Story, which talks about the real people who use this world. 9:32 - The reason the Geneva Freeport is the largest is because it's the OG. It's the model that informed the others, originated from the need to store shipments like grain across European countries overnight without paying tax. It's also state subsidized, and in full view of the outside world. Plus, there is a section that has non-VAT items. 9:40 - The collector in my book stored his own artworks in Geneva. His collection actually included Klimt, Da Vinci, Renoir, and Van Gogh all at once. Buy my book kthnx
This is, no exaggeration, the most 'OMG' video I've ever seen on RUclips, and, sadly, I've watched untold thousands of videos. Seriously, this is an excellent exposure of a subject that I thought I knew of but actually had no clue as to the reality of it. Wow. Thank you.
Sorelle, you are my idol! You are an absolute ICON. Your journey has been so inspiring. Thank you so very much for everything you've done, for sharing your life & insight, and the truth you bare. Also, those overalls, girrrrlllllll🔥💖 Much love from New York🗽
I find it hard to believe a deduction could be taken that exceeds the actual cost of the painting. You’re out $250K how is the IRS gonna allow you a $10M deduction? You are giving the appreciation away not experiencing it as income at any point. You would first have to claim the $10M as income to then turn around and deduct it as a charity expense.
Because it doesn't work like this. Besides it not counting as 10m write off (as in expense, not as in "I now don't owe 10m in taxes), you are also limited by how much you can donate and write off (and the number is pretty low)
In Canada artists used to donate their work (decades ago) and received a tax credit for the retail (appraised) value of the painting. Now, the tax rules only allow the cost of materials. If a third party donates art, there is a minimum time the owner has to have owned the art (I think it's 3 years, but it might be more), and when they donate it only get the lower of what they paid for it or what the charity sells it for (after costs of sales).
Question: Who is actually being scammed here? - Is it the government being scammed out of the tax dollars they are owed? Well, not really. The government is willing to let charitable donations be deducted from taxes, which seems like a reasonable thing to do. And in this scenario the charitable donation really did take place, so it seems like everything is above board here. - Is it the artist who's work is being used to run the scam? No, the artist is happy because he's getting all kinds of free promotion out of the deal. - Is it the other buyers of the artist's work who now have to pay more than they otherwise would on account of the pumped up value? Maybe-but on the other hand, they probably wouldn't have ever heard of the artist if not for all the promotion the rich benefactor paid for. It will always be the case that popular stuff is more expensive, and it's easy to say in hindsight that you should have bought in when the price was lower. But the reason the price was lower before is precisely because not very many people wanted to buy back then. That's just how popularity works. - Is it other artists who have to compete against the one being pumped up artificially by the rich benefactor? This one seems closest to being right, but then, popularity as an artist is not exactly a meritocracy in the first place. If it wasn't rich people making artists popular, then popularity would be effectively dumb luck, which hardly seems better. So, honestly I'm not convinced that what's happening here is actually bad. Promoting artists with a lot of potential who might not otherwise have been noticed seems almost like a public service that someone should be doing and would deserve to be compensated for. Maybe that's a hot take-I don't know. I'd be curious to hear anyone else's thought on this.
Answer Tax man & artist. The museum gets a painting they don't want and have to pay to store/insure and are often restricted from selling it. But even if they could there would probably be no buyer - certainly not at it's 'listed' value. Artist is ok, but only IF they are able to sell anything at an inflated rate while the going was good - otherwise they would be said to have 'lost it' and the gallery would move on.
@@manofkent4472 Hmm... it sounds like you're imagining there will be a precipitous drop-off in the value of the art after the benefactor stops pumping it up. I can certainly imagine there will be some drop-off, as nothing can be at peak popularity forever, but do we really think that the value will plummet to the point that nobody wants to buy at all? To the point that the artist is worse off than they were before all the free publicity? I guess that's an empirical question which I don't know the answer to, but I find it kind of hard to believe. If we were talking about something other than art, I would totally agree with you. Like pumping and dumping stocks is clearly a scam, because there is ultimately a real company producing value behind the stocks, and pumping the stock basically amounts to lying about its value. But for art, the perceptions are all there is. It's not a lie to say "so-and-so is the next big thing"-it's just an opinion. And that opinion becomes the reality if enough people agree with it. Then, once as artist has been deemed "noteworthy" by the art world, I see no reason they couldn't continue to ride off that forever. I mean, a lot of people think Damien Hirst's art is bad, but that hasn't stopped him from continuing to be a big name and earning loads of money.
I basically know nothing about art, but I love going to galleries and have been fortunate enough to go to some of the great ones around the world to see some amazing pieces.... knowing that there are many wonderful pieces that nobody will ever get to see and enjoy because they are forever hidden away in vaults is incredibly sad and disappointing. I'm sure many of those artists would not want that for their work. Just another by-product of rich people's greed I guess.
You say you know nothing about art but surely visiting a gallery and enjoying it is what art is all about in its purest form. Would you buy a local artists work for $50 and display it in your hallway? You would be essentially hiding it away from everybody except close friends and the occasional plumber.
@@bmmaaate yes it is, which is why I'm sad that all these valuable masterpieces are locked away so nobody can see them. And displaying a $50 piece of art at home is far different to locking away a centuries old masterpiece so that nobody can ever see it, it's not like they are on display in the vault for even the owners to enjoy them is it? They are locked away in storage.
Okay, I'm an artist and I have been all my life & even ran two art galleries in Paris, on the Isle Saint Louis. The owners of the galleries had no clue about this but they were small galleries. I also know a lot of good artists who make an average income however I also know those who make a lot. The ones who make a lot are not necessarily plugged into this system, they just work hard and do great art & consider themselves very fortunate to be picked up by the people you are describing. It does exist, it's real and it's unfortunate that the very rich bring art into disrepute by doing this. However there are tax benefits to normal people who buy art too if they do it through a company. Dentists in Paris have caught onto this as there is a law that gives them a reduction in taxs if they buy art and display it in a public location, their reception area. In Ireland there are also benefits though I'm out of touch with that now. I will share this on facebook. I don't think it really helps real artists in a practical way but it might start a constructive conversation. The artists who follow me won't be thanking me for it, even though they don't benefit from this craziness but they might hope to :) Which is foolish, as this actually undermines the real value of art.
It didn't take more than an hour for the vitriol to start. Name calling and insults on facebook. I actually had to block someone whom I know is 'attempting' to be recruited.
@@artytomparis Wow interesting 🤔 I shared this a few minutes ago so curious to see the reaction from some of my arty friends and others…I’ve been doing a business course in art that a very ambitious artist I know created and has made six figures from in the past year and she encourages us all to basically shoot for this but spins it in a good way as if it doesn’t really matter that it’s a huge manipulation as long as you get the bag!
@@lucibloom5966 Yes well that's like suggesting that someone goes out and buys lots of lottery tickets and sleeps with the shop keeper too. That's the problem with the art world today. It's completely normalized to behave that way.
I worked as a researcher for an art appraisal firm, and this is spot on. Often if someone doesn’t “like” the firm’s appraisal they’ll simply shred the documents and go to another firm for an appraisal more to their liking.
Money is an issue that everyone has for a better and luxuriouslife, life was hard for me until I started trading crypto and am now earning $20,000 per week.
For someone who doesn’t understand economics or finances I’ve actually been aware of this without knowing I don’t know how many times over the years I’ve looked at very expensive art and said I would never pay that It looks like someone scribbled on their book If that was done by me a nobody I’d get nothing But because it’s a high known artist all of a sudden it’s extremely valuable The only difference is the name Now I know why
@@skyeblu817 WHAT?? YEAH, OK, YOU'RE IN CHARGE, YOU'RE THE "ONE" !! LETS NOT MAKE A JOKE, LETS LIVE BY YOUR RULESL!!... WOW WTF ARE YOU RESPONDING TO??
You don't save any tax dollars in your example. Because you earned 10M - 275K - 10K = 9.7M and donate 10M, so your total loss is just 285K. You can't offset the tax losses with this example. Because you gained the value of the painting which shot up from 10K to 10M. You have a taxable gain (when you sell) in 10M. If you had sold the painting you would owe (10M - 275K - 10K) * (federal tax + state tax + commission to auction house). If you donate 10M again you have not offset any other gains since you made about 10M on paper.
This is very Sad - because there are a lot of very talented artist that never see the light of day in the market - because of these gatekeepers- /the real cost is the culture and richness for humanity that will never be appreciated because of the greedy a holes 🕳 trying to save on taxes 🤬🤔
I am a sculptural artist and I knew about the tax scam and buddy system of the elite corporate artist community...and that is why I know that my ability to break into the art world is limited. There are so many super talented artists that get ignored because they are not connected to a "collector." We as artist need to end this system and get back to real working artists and real art lovers that buy true works of art and not crap on a canvas and hyper inflate the price for tax avoidance.
Make your own art world. Rent a space with other artists and put work on display and hand out some cheap plonk at an opening night. I saw a guy pay $400 for a blue splash of paint in a tiny gallery not long ago. It's not $4mil but its a start.
"... so this is the part where we make the artist famous and we have to boost the value of the art to feed that." Now I know how a "con artist", like Damien Hirst, became "famous". 🤣
I think a lot of artists would have appreciated at least an acknowledgement of the many honest, hardworking artists out there - even in these upper echelon elite art worlds. There ARE various reasons some art does become legitimately valuable, and these bad actors are muddying the waters with their schemes.
Thanks for the video, Sorelle. I've been wanting to ask you about this for a while and wondered if you'd perhaps address it in a video. I keep hearing that having money in the bank is this bad thing however if our levels of cash aren't quite enough for proper investments, what would you advise?
I can't advise you what to do. But what I do is keep just what I need in bank accounts to invest, and a little for an emergency fund. But whatever I don't need beyond that goes into what I consider real money; things like gold, silver, crypto, and property.
@@Abundantiaco Thanks for taking the time to respond, Sorelle. I appreciate it. I wish to make clear, I wasn't asking you how to spend my own money. That's each person's responsibility. However, for those people who perhaps don't have enough just yet to invest in a property, I do wonder if going into crypto and precious metals is a wise move. Very hard to know in this quite turbulent and very unpredictable climate.
@@mariarossi6719 I’m in the same boat. I decided to buy canned food with the small amount of cash I have. It’s practical and of value. You can trade food as currency if the dollar collapses. That’s one good thing about food over gold. Everyone needs it and it holds value that way.
I know a very famous Asian artist here in Paris, he's in his early 80s now. He came from a very wealthy family. He studied philosophy in Japan and in Germany, so he knew how to talk up some good bullshit (he is not Japanese). When he started making conceptual / minimalist "art", he organized exhibitions in galleries, gave money to his friends to sell out the shows, bribed art critics to write positive reviews. As his reputation grew, so was he able to bribe higher and higher grade of critics. And because he comes from a powerful family, eventually the very powerful friends of his family bought his work (that he didn't have to give money to), and important museums in America, Europe, and Asia bought his work for their collections. An example of his "art", which I saw when visiting his studio, is a huge white canvas with a single black brush stroke. There is a long waiting list of collectors for these "paintings" which sell for around half a million, but the "artist" only produces about 20 of these per year. The "real artists" in this con game are the dealers, museum curators, collectors and the art critics who conspire in making highly effective conceptual art.
Love your videos, but I don’t think the tax code works exactly like this in US and many countries. The gain from purchase price to donation value is also a capital gain and so the high donated price would be counterbalanced by the taxable capital gain. You could however, in US, bequest the art to children upon death and their later donation would have the cost basis readjusts upon the parent’s death. The very rich, especially large corporations, use different methods entirely unavailable to mere millionaires. Examples are corps owned in different countries with profits shifted to the zero tax country while losses sent to the US corporation. Then the overseas Corp “loans” the profit back to the US Corp. There are also many specific loopholes written into law for the extremely wealthy. You could consider though that the rich still often pay a lot more in tax than the benefits they get. The real issue IMO should be stopping rich, or poor, who leech off of others.
@X in the US it would be the donation which would trigger the capital gain calculation which would be subtracted from the donated value. So ultimately only the initial purchase price would count as a donation, unless the art was inherited and then the “base value” counted as a donation would be the estimated value at time of inheritance.
Having gone to art school in the early 90's , the era of Tracey emin and damien hurst , I was aware that it was not what I had been led to believe an art school was. I was 16
I finished a scam series that's hot on Netflix today and now I'm sad about art too. This was super interesting and so well and easy to understand explained! 👏👏
having studied art and known genuine talents it is obvious how many talentless or extremely weak talents with connections are the ones with a career nice to see the financial reasons and to have confirmation of shallowness of so called experts
Very interesting, thanks for sharing this information. What I understand is that all these things are actually coping mechanisms to deal with a problem. The problem/or cause being the TAXES ... which in my opinion are simply theft.. Why ? Because no one has signed any contract with the tax collectors, which themselves are registered as companies (governments are registered companies, banks are mainly private, and the federal reserve is a bunch of mafia bankers, bribing politicians)... And when we don't have a signed contract with a company, we actually don't owe them anything. Not a penny. The tax-system is held in place by our - the people's - belief in it. We believe we should pay taxes in this way. But taxes are enforced upon us. And we, the people, like to be free and sovereign. And no other people or corporations have the right to steal from us, under the invented name of 'taxes', and by selling a story which is actually a big lie. They are doing this to control us, the people. I think we should rethink this tax-system, we should only pay what we agree to pay voluntarily, and for the projects we want to support (or for the services we individually need, that have to be payed from collective money) So instead of constantly trying to find coping mechanisms, shouldn't we just get rid of the problem ? I think there is a rise in consciousness and knowledge needed (which is slowly happening at the moment), in order for the people to stand up and say NO to these corrupt and enslaving systems,... Thank you again, have a great day ! 💖 .. Greetings from Holland x
Your comment reminds me of a tax system that was very close to what you described. The Tax was 2.5% of sitting/dead capital that was not used for a year. This was to ensure people did not hoard the wealth but put it to use so that it creates growth in the economy by ensuring velocity of money. The Tax was collected purely for welfare purposes. Anyone who could not afford something, would go the governor of his area and will have his/her needs fulfilled. INTEREST was ILLEGAL in this economic system. This economic system was in practice in one of the largest and longest lasting empires in the world that was based on knowledge and peace and prosperity. The Islamic Empire. The KEY to the problem is not taxes. It is the INTEREST based economic system. Even the economic professors agree that Interest is the most destructive economic tool ever. Taxes is the by-product of interest based economy. Because as the currency loses value (which is caused by Interest), the government has to impose taxes to meet the shortfall to do their job.
@@SeekDaTruth Yes, I looked into that in a superficial way years ago and came to the conclusion that a lot of the reasons for wars between the west and east was because the western banks are basically bankrupt. They live on debt not wealth and they exist to enslave each other. There's nothing they would like more than to expand into new territory where there wasn't any existing debt system. It's very perverse.
Your comment would make more sense if you had your own personal roads, schools, police, fire department, military, water treatment plant, and food inspectors. Do you have those things? What planet do you currently live on where you can afford all of that infrastructure? In fact, you made the comment on the internet. Remember who paid for all those fiber optic cables? Hint: It wasn't Time/Warner.
Having spent almost 40 years in the contemporary art market, I have no dispute with the claims in this well-presented, nicely-paced, and succinctly explained video. The rot at the top of the art world's food chain is very real, but we must be careful not to paint all artists, galleries, museums, and collectors with the same brush. The vast majority are hard-working individuals squeaking out modest incomes who share a passion for arts for the enrichment of our communities, not for their direct profitability through sales or indirect profitability through tax savings. Over the past century, the art world has become just one of the many conduits the ultra-wealthy have utilized to increase their wealth. Let's be clear: the villain is NOT the art world, rather the manipulation of any industry by ultra-wealth individuals and their political partners who will always be the root of the problem. We should be pointing our fingers at these dirty players simply because they are already filthy rich and yet still greedy for more. The methods discussed in the video are all long-play schemes, not overnight get-rich plans. Any person who can take advantage of these donation and tax deferral schemes is quite likely already in the top 10% of wealth holders. I say blame them, not the struggling artists or small gallery owners. The worst offenders utilize tax loopholes and profit from financial deregulation in countries where fiscally conservative politicians purposely devise tax code that favors the high-wealth individuals who bankroll their political campaigns. Truth be told, the most evil financial lie of our time as mentioned by the video poster is not the art world. It's these politicians, their dark donors who abuse them as puppets, and the small cabal of sycophants in the art industry who facilitate the system by conspiring to alter the trajectories of certain careers. Lest we forget, similar systems exist in almost EVERY industry. This is NOT specifically an art world problem. A couple handfuls of rotten apples are ruining the barrel for everyone else. 99% of all art world professionals do not circulate in the rarified air of the pinnacle. We can't afford to manipulate winners and losers like the closed circle that perpetuates the cycle described in this informative video. We have been calling out this practice for decades and have been crying for regulation for at least as long. We insist that it's not the art world that is evil, rather it's the politicians together with high-worth individuals who will stop at nothing to bilk any unregulated system for personal gain. It is an absolute fantasy for anyone to believe that the art world itself created this gravy train on its own. In fact, the art world is being held hostage by the real culprits, very few of whom work in the art market. Why is the art world being held hostage? Simple, if politicians closed tax loopholes and regulated the market so that egregious profits through tax savings from donations couldn't be made, the ultra-wealthy would look elsewhere to park their capital literally overnight. In so doing, the upper echelon of the art market would tank. To be honest, I and many others would find this to be a preferable outcome because the playing field for everyone else would eventually be more balanced and less controllable by small groups of influencers like it is now. The total art market would shrink drastically, but in the long run, I believe it would create a healthier, more democratic, and more sustainable market based more on merit than on money. Recommendation: A suggested companion piece could be to discuss the effects of art speculation and flipping of emerging artists, a process that has decimated the careers of hundreds of young artists long before their time.
There is also the phenomenon of faking famous antiquities and just displaying the fake in a museum, while the wealthy benefactor gets to keep the original in his own collection. Any thief would discover this to their cost.
This kind of "scam" is just one of several reasons I can't get upset when (infrequently) an art "forgery" scheme comes to light. We have no way of knowing how many works of art are out there that are not what they're purported to be. Many so-called "experts", who claim to be able to judge a painting based on brush strokes or canvas appearance, are likely in on the fraud, and authenticate artworks that are very good replicas, but fake, for a price. Once a painting is "accepted" as real, it's to the "experts'" best interests to fight tooth and nail to protect their "reputations".......and these experts scratch each others' backs to protect their "system".
@@flazeda8743 There is one important factor here. You have to develop " the eye" , the abillity to know that is art in the first place. Once you can do that a lot of options will be open.
Also helps explain why prestigious art education is so expensive. Going through the process is what gives you a "name" and makes you investable. The public find it funny that art school graduates speak in incomprehensible jargon and pose as all sorts of radicals, but that's an essential part of the misdirection that hides the tax scam.
@@jmitterii2 No it's easy. Just find a young artist, buy their work, convince everyone it is worth way more, sell it for millions... boom! You are now a millionaire. It's so simple.
Considering the trash that gets sold at incredible high prices there is no way someone would actually want crap that would make even Jackson Pollock blush in shame without some ulterior motive.
Using art to free humanity from the slavery and bondage of taxation and government, while also launching the careers of undiscovered artists all around the world? Unbelievably based.
@E A One way to deal with idiocy is by reading good books. I suggest you start with Anatomy of the State by Murray Rothbard. If you don't get it after finishing this one, just come back and I may suggest you more good readings, if you ask politely.
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This scam is as old as time, but it was used on people, you take a nobody from the streets, put him through good schools or the right circles and get him elected as president, than you can re write the tax code in your favor or history for that matter... get a country to start a bunch of stupid "social" programs, increase spending thus borrowing, then bankrupt a country from within... Medici family for instance took a pirate and made him their puppet pope that's how they grew so much...
That saying is for the lazy and the talentless !
Two words : Hurst & Saatchi ?
Look up on RUclips.
" The Art Damien Hurst Stole"
Eye opener. Bubble burster for me.
An artist is not an everyday person. They are rare. Any one can be trained to create existing masterpieces. Trained to paint what a photo can paint now.
So how is valuing an artist who may create something most rare and hard to reproduce a crime? Or unfair?
To hold such a high value on something created by an individual who may not ever create that same piece again shows intelligence.
Each flower is different, but each have qualities that make it a flower.
One who appreciates a flower sees the miracle of life, thus understanding no pile of money can replace the miracle of existing. Existing to see and feel what art expresses to the individual.
For most art may be a scam and id bet they rarely have good art in their homes.
Art should be valued At the highest level for creating something to envoke a feeling or to release a feeling and then having an impact on another is one of the highest orders of magic humans can experience.
What a trove of magic those hidden galleries, those safety deposit vaults.
If art or humanity should be lost, these vaults of art hold the key to our glorious humanity rising back to a creative and godly state of being. Instead of all the other ways humans can be that are not creative.
Excellent video. One thing is missing from this : not only these people get to save heaps on their taxes, but, unlike other tax evaders, they also get to pass as philanthropists in the media.
That's not all, they also foist their terrible "art" on whatever charitable institution of choice they have, and then that's what goes up on the walls and the public goes to see at museums. Thereby people think that this is the best that current artists can do and lament the state of art and how garbage it all is. While in addition forcing out artists with actual developed skills and beautiful art, this is an important part, because you don't want to deal with the costs and difficulties of finding such a person, nor do you want those works to stand in comparison to the garbage which would start to give lie to the whole set up.
taxation is theft, no one should pay taxes.
Right! Investing so frustrating here, i keep losing
@@ericalorraine7943 Look up Christine Lynn Saitta, she is God sent to us
It's fascinating to hear that someone here employ madam Christine's services
I went to art college and always felt they didn't at all prepare us for the art world. There wasn't even one lecture on connecting to galleries. Now I wonder if they just didn't want to tell us that this is part of the deal of being involved in this industry: shady insider deals and tax scams. Oh and by the way, your art might just end up in a warehouse if you make it big.
@Melvin the Magnificent I agree, art is meant to be seen.
NFTs enter the chat
Ya art schools care more about teaching you to express your emotions through finger painting and throwing paint splatters on canvas rather than actually teaching technique.
@@000bullets That wasn't my experience. Their teaching was more about facilitating and developing your ability to talk about your work. At degree level they're not going to teach technique because you learn that in the Foundation year and you work more independently. That's how it was for me anyway. :)
As someone who used to do taxes, this makes so much sense. I also agree that it's super unethical and am in no way saying this is a good thing, but they basically came up with a way to essentially donate millions to charity without actually spending that amount. It also explains why a lot of "modern" art goes for such stupidly high prices; I had always wondered the reason for that.
The thing is, because they've artificially inflated the price, doesn't mean whoever they donate to will be able to sell it for that price. Sometimes, the charity is left with a painting that on paper is worth a lot, but they may not ever be able to sell.
If a gallery or auction room has many works by an artist ( 20- 30 paintings by an emerging Aboriginal artist ) They stand to make a fortune.
You have missed the point, the artwork is worthless. Intent to deceive, jail.
Catherine , not quite. As they can be used later down the track too.
Its when that artist is dropped cos of a lack of talent or experience. That artist then cannot sell as those initial works are set at such a price that they may never sell again.
@@GFYYT11111 but, likelihood of jail time is near zero because art is subjective
As an artist, I was walking out of the Lyme Art Association last week after dropping off a few pieces for jurying. As I gazed at the hundreds of gorgeous works sitting there, done by local, mostly unknown artists, I was blown away by the vision and talent just in our small area of the world. Tears came to my eyes because of the wonder of man’s giftedness, and the limited access to the beauty that is produced. We used to know that in order for a human to develop successfully, he must be able to function with both sides of his brain. The right side, creativity, has been systematically allowed to atrophy for the last 80 years , by first taking art and music out of the schools, which actually are an important form of recreation for the human and gives him appreciation for personal accomplishments. Children are discouraged from the arts by parents who pronounce “there is no money in it”. BUT the hobby should be maintained, as most people end up in a job that does not fulfill on many levels. Even our architecture has become square mostly boring boxes compared to the large ornate structures from hundreds of years ago.
We spend our time watching other people being “creative “ on tv. Our halls and buildings should be covered inside and out in beauty. Our children should be encouraged to express themselves and have joy and spread it to others. Art and music are food for the soul, whether we are able to make it or appreciate it.
"Children are discouraged from the arts by parents who pronounce “there is no money in it”."
We discourage pursuing the arts for our children because it's filled with pedophiles and sex predators.
@@bearkowlbama6352 ….I have been a dancer and visual artist in my life, and have only had to deal with a few situations, luckily nothing serious. Some of my family were devious, so I learned to know and avoid certain situations. I think the top artists may have to compromise if they are dealing with the big guys in the field. No one is completely safe anywhere, we have to develop discernment.
@@cmwHisArtist You are right, no one is completely safe anywhere. However, when one is trying to avoid ant bites, standing on an ant nest isn't the best choice.
Yes its sad they've takibg creativity out of schools...even Einstein said creativity or more important than knowledge!
@@trustwithin7188 What's worse is they've replaced creativity with pederast grooming.
As much as I love art, this just re-affirms my hate for the art world. There are always people who can corrupt the beautiful things of the world.
@Yanami 873 Yeah, it's very similar to the puppy market. A friend of mine finds puppies that are undervalued, buys them and then convinces a few of his "friends" that they are really valuable, then gets an "expert" to tell everyone: "this is a really valuable puppy" and then he sells it for a huge profit. He then takes that profit and buys more puppies. He currently has about 1000 puppies and doesn't pay any tax.
@@revrevreviews Where the hell is he keeping 1000 puppies
Definitely it makes me sick but explains why most modern art is rubbish 🗑
@@MyName_Jeff puppy mills, dog farms, whatever ppl call them n their areas.
@TrustWithin That's what pisses me off the most. The most garbage art is some of the most expensive art and the people in the "art world" are the most snobby and clueless people when it comes to art.
As a practicing artist myself, for whoever watching it, I can give some inside view. One of the big no no for fresh artists are not increase the price of your art too fast because price your art ideally should never go down but up. So when situation in video mentioned happened, the gallery and collector basically try to squeeze as much juice as they can from the artist until the price of artist work no longer get higher and no longer can sell.Both of parties get profit from the work and they will just abandon the artist. Since your art can’t get low but high, you basically stuck in this situation that no one will buy your work because of high price and there’s nothing you can do.
This is actually pretty insane. I never knew...until I made the video about it.
thanks Sorelle for teaching Sorelle
I never knew it was this corrupt but always had an idea. As someone who grew up around the art world it never made sense to me how an artist that can paint essentially a banana was deemed more marketable than someone with more profoundly obvious talent. Thank you for making this video. Love your new journalistic approach to your content. Subscribed to newsletter and shared.
Hi Sorelle, you should do a video about how churches are also used for tax evasion, one example is Kris Jenner who founded a church and all her daughters "donate" millions of dollars to this church which they use to write off their taxes, I'm interested to know if this is done worldwide by the ultra rich.
This makes sense, Sorelle just curious how you uncovered this, through research.
@@coryda obviously. what else? through divinations?
In the US (I can't speak about other countries) a tax deduction does not work quite like she seems to describe at 6:50 in the video. What she is describing seems to be a tax credit. In her example, the deduction reduces the taxable income by the $9 million she mentions, not the tax liability, which is the amount owed. Since the top federal income tax rate in the US is currently 37%, the savings on federal taxes would be more in the range of $3 million. A caveat here is that some states have high income taxes as well. In California, it's about 12%. So a person living in Los Angeles might be facing a total tax rate of 49% and the tax saving would be about $4.5 million.
So glad to see this comment, exactly what I was thinking while watching that part of the vid. I think it's the same way in Canada too. Charitable donations deduct from taxable income, not directly from taxes owed.
THIS comment needs to be pinned. I know of nowhere where income is taxed at 100%, which is what would be required for the scenario to be correct.
Thanks for posting this comment. It's more accurate than the premise in the video.
I think she understands that, it just wasn't presented clearly in the video. It's why the final numbers have to be so high.
C'mon man, if you really want to make money, get lots of views on youtube videos. On things anyone and everyone can do. Tomorrow.
I am both impressed and appalled on how creative they are in scamming us.
It's insane the creativity that goes into this stuff!
I kind of view it the other way around. The only people scamming us is the government. It’s a literal armed gang. Naturally, said gang wants your money, you know, since it doesn’t actually produce anything of wealth. These “art investors” are just trying to protect themselves from being robbed. Here’s a radical idea: let’s get rid of taxes and these things will disappear.
Because we are their farm animals.
They aren't scamming "us" they are scamming the tax collector's.
This is why tax laws should be as simple as possible, because it leaves less room to maneuver around.
@@terencestamp3225 perhaps we need broad discussions about the definition of ‘government’. Currently, the government is said to be full of big business cronies who set laws that favour the wealthy with their ever-expanding pockets and proportionately decreasing tax contributions with the remaining ‘fools’ (You, me and Bob The Builder) footing the bill. Is that bill for us larger because we’re covering the shortfall the rich have dodged?
The concept of fair and just governance is what civil society means. Perhaps the key is ensuring that genuine democratic government is in place with effective balances and checks in order to keep the playing field level. Alternatively, eradicate taxes for those on salaries and tax property ownership?
I’m not sure the idea of ‘the rich are just protecting themselves’ is a good excuse when these rules for the wealthy can’t be used by ordinary people unable to pay substantial backhanders for what is nothing more than a legal ruse.
I'm not sure this works the way you're saying it does.
In order to book a 10m loss, you'd need to increase the book value of the asset to 10m, therefore having a capital gain you'd have to carry. Without the cap gain, you'd only be able to write off the 250k.
So essentially, you'd be spending 250k to receive a write-off of 250k.
Also, your deductible donations are limited to a % of your gross income. I can't remember what the limits are though.
... and those limits are very low as well! So all this is BS, it doesn't work like it was explained it does (which could take 1 min instead of 10)
This is what you get when the ignorant try to find reason for high art prices
I worked for a woman who ran an art magazine. She found artists, bought their work then promoted the hell out of them. The art goes up. Donate inflated shit to charity and write it off. Rinse and repeat. However much she said it was worth was 100 % her call. Literally printing money by decree.
@Dave did you watch the video? It explains exactly this. They're donating a piece of art worth much more than what they paid in order to claim a tax write-off. This means that they "profit" by not having to pay taxes on the amount of money they "donated". They are lowering their overall taxable income without actually giving away that money. AKA legally evading taxes.
@@JamesPhillipsOfficial well it must be significant enough that it’s worth it, or else they wouldn’t do it. Also I’m sure there’s more at play here that we don’t know.
@@JamesPhillipsOfficial That's the scam though, no one's actually going to pay that inflated "valuation" from the "appraiser", it's a fake price but the valuation is considered valid by the governments, once it's donated
This is how Salvador Dali became "famous" too. His wife Gala promoted him in the NY art world. Dali was so outrageous......photographers took many pictures of him with models, at high end social parties, and even walking his cheetah down to the subway station. It's all so crazy.
Right!!! I mean it goes to show that material things (including paper money) mean nothing unless someone else agrees on it's worth.
This goes even deeper. The ENTIRE world of fine art is predicated on one individual or institution reinforcing an opinion of another in a reinforcing loop. As to witch artists are successful and who are, usually based on who you know and who you blow, to use the vernacular. It's an entirely fictitious world created out of whole cloth, and the quality of the art is never a factor.
I’ve been into art my whole life. I agree. Trying to break through if you’re no one seems like an impossible task. And in so called ‘art community of love and rainbows’ it feels so revolting to me. That’s why all the good things are always in the dirty underground, hehe.
As gore Vidal once said: "not having any talent is no longer enough " ..
The local museum in the large city I live in has a contemporary art curator who only gives opportunities to young male artists who are willing to have affairs with him. It's not even a secret. Everyone knows (including his wife), but there's nothing anyone can do about it. He's the "authority" with the degree and connections.
I work in this industry, low level.. this explains so many weird things I’ve encountered! Similar things are done in High end real estate to launder lol
So the house wasn't really sold but was pretended to be sold to increase price value?
This has been around forever. I remember when Van Gogh's Irises sold at auction for about 50 million to a billionaire in the late 80's. This was over 30 years ago and set a record for a Southbeys auction sale. Alot of the details in the deal were hidden and turns out he actually didn't have the money, was lent about 27 million by Southbys, and eventually the painting winds up in the J Paul Getty museum. One of the most important paintings of the post impressionist period stamped with the "None of the publics business" heading. Art world in a nutshell.
I graduated with an art degree and had discussed some of the bizzare exhibits at the Chicago art Institute with friends. I told them they were there as tax write offs for rich people. While people stood in front of a giant black canvas for an excruciating amount of time trying to connect with the artist the gallery waited patiently for the day they could pull the garbage off their walls after satisfying the donors requirements. At the time it was mostly known artists who could convincingly be justifiably overvalued by the museum appraisers. A one million painting being valued at 15 million. My friends were incredulous. The entire concept too far fetched. Yet, there are the perplexing exhibits, the stores of paintings in the museums basements that will never be seen, and the otherwise self centered selfish uber rich falling overthemselves to donate priceless works to museums who just don't have the wall space to exhibit them. You bet. Has to be something else.
It's only 'one of the most important paintings of the post impressionist period' for reasons described in tbis video.
@@InkandFish555 OK. While everything is realative, not everything is worthless. Was it worth over 53 million? Of course not. What fifty million can do to relieve the needs of those in want is immeasurable.
The fact that rare historical things appreciate in value is a fact. The fact that old masters sell for less than some modern art is a good reason for cynicism.
It just hurts a little to see poor ol Van Gogh dragged into it.
@@nalvarado65 The point is, he's only historical and important because a conspiracy of people in the art world made him so. He was a failed and forgotten artist in his own time and by his self assessment. Like a lot of the artist from the late 19th and early 20th centuries that have been dug up and deified by the art establishment and constitute a lot of the content of university courses.
And that is why I can't be bothered with art culture. Much like politics, it's a den of vipers.
@@growlith6969 It's completely manipulated and fronted with a facade of people that take it completely serious.
As an artist who lost the use of my right arm from overwork doing 400+ mostly sizable detailed fine art pieces in my life, with 4 solo exhibitions at our Central Bank etc. I always knew of the fraud in art prices, yet it's nice to hear this 'how it's done' description.
Was the loss of use of your right arm a gradual thing or did it just randomly happen? I never heard of something like this happening before.
Post some of your past art on your channel
@E A It happens all the time. Look up: repetitive stress syndrome.
I have a friend who also lost the use of their right arm due to painting too much. They actually used their left hand to control the brush but would "touch themselves" with their right hand at the some time. I guess that is just one of the unspoken risks of being an artist.
As an art appraiser I can tell you that a major thing you are missing is that the irs audits any donation over 50,000 and a group of three experts are on this panel. The irs is well aware of these schemes and appraisers do net get paid six figures to appraise a painting and there is also no such thing as a certified appraiser
You miss the fact that these people get paid off or a actually involved in the whole scam
Excellent, thank you.
I listened to an interview with an art critic about 10 years ago. The host of the show asked " What makes one artist great and another one not" The critic who was as smug as they come, responded "Hot air"
great answer
@E A?
This was indirectly brought to my attention at an art gallery during a trip to Las Vegas when I struck up a conversation with one of the sales reps. The pitch wasn't so much to sell me on buying a $30,000 painting for an up and coming artist who had more buyers for his work than he was capable of producing paintings for, but that I could use the painting as a business tax write off by putting it on display in my work office. That was literally the pitch.
It always boggled my mind on the prices paid for "art" by the rich.. Now I know why they do it!
As a person who spent some time dreaming sweet illusions about this whole scene, thinking about being part of it - I felt something stinks and changed direction of my life. I found out years later what it was about, and I must say I am grateful for that gut feeling.
ART Consciousness
Excellent presentation.
As an artist myself, I was both horrified and disgusted by how this scam works when I first discovered it. I realised that the rich had essentially highjacked the world of art, and by doing so had corrupted the natural evolution of art itself. If money becomes the main motivation of art then it becomes something else, not art. It becomes a commodity and thus a product. That is not why I went to art school and university in the first place. For me art is not a product. Art is not about selling, it is about having something to say that's worth telling. The moment money gets involved it will automatically corrupt it. Therefore I decided some time ago to make sure my art never gets into the hands of someone playing this tax scam game. I only sell to those whom I can see genuinely love the work. What is interesting in all the art scam game of art collectors, is that the collectors are now complaining that the art of today has become boring and repetitive. They say the artist must do something about it. They say they are waiting for the next Picasso but there is none in sight. What these greedy manipulators fail to see is that it is they who have created the environment in which a new Picasso can not emerge. Art evolves because the artist responds to something that affects their psyche not because how much someone pays for their art.
Art Consciousness: The myth that Picasso was a great painter was created by the same so called modern "elite" (social engineering/ugly is beautiful, etc.). Mockery of true art. It reminds you of the fairy tale "the emperors new clothes". A new Picasso can´t emerge? Look at the paintings and drawings of very small children, they are no different. But can you call it art?
@@isabellamusulo9190 I call it fart = fake art.
And here's me thinking rich people genuinely liked art. Thanks for exposing the scam.
Please more on this topic! It has always intrigued me. What makes it a perfect scam is the beautiful shroud it is wrapped in. You are supposed to love art and pretend you appreciate it, otherwise you’ll be accused of not having either a heart or a brain. Few people have the self-confidence so profess they just don’t get why a certain piece is a big deal. If they did, this wouldn’t have been as easy of a scam.
Art-market wasn't as manipulated, small and ambiguous as it has become since last few hundred years. I couldn't agree more with this hangout.
Does it not seem very coincidental that crypto has very similar qualities? There is nothing tangible in crypto, it only has value as long as the next sucker wants it. The prices are ridiculous… Just saying.
You forgot a few things in my opinion. First a lot of art these days is bought by foundations and not directly by the billionaires themselves. This helps with legitimacy, public opinion and you can base your foundation in another country than the one you live in. I am missing a lot here but there could are whole theses about the use of art foundations.
About freeports let's not forget two things, first most famous art appreciates over time so it´s a great way to turn new money into old money wile avoiding the depreciation of currency. Moreover it produces artificial scarcity so the more pieces from an artist are hidden in a freeport the more his avialable pieces might appreciate. Finally private sales within freeports can help the art pieces appreciate without ever going to the open market, preserving the scarcity. Expensive and/or famous art gets bought stored in whatever warehouse in geneva, gets traded a few times between collectors and foundations, comes out 10-20years later and gets auctioned for 5-10x the price it was bought for.
Makes perfect sense to me. I always thought certain artists were well over priced..
Which would explain why there is so much overpriced art that is truly, utterly, obviously complete shite..
My art history told us about this at college while some of us that were working on projects after class. It was very eye opening about how a lot of the art world works in the "high end". Great video laying it all out.
Sorelle, you are a work of art yourself, and you are also priceless.
Here for the elevation of Sorell’s Pedagogical [art of teaching] skills. Sending you all the positive vibes, May your creative reservoir always be in the path of the deluge.
Hahah... that's such a nice way to put it!
I remain teachable @@Abundantiaco , best to Leon also. 🕉🧘♂️
Geez……I’m just amazed at how well Sorelle is able to grab your attention and keep you engaged, and simplifying the message. No question that she’s an attractive woman, but she’s charming and communicates in such a way that there doesn’t seem to be a trace of a negative attitude (jealousy, judgment, etc.), although she is still able to call dishonesty what it is, but with total objectivity. Fun to watch and learn….definitely must subscribe!
This is a complete bs that is talked about a lot and it doesn't work like that. If you are donating something of value X, for a tax write off, you get tax write off for the price YOU PAID FOR, not the value at the point of donation. If it was at the value at the time of donation, you would be paying taxes on the difference, hence not saving any taxes (but paying same amount anyways).
And this is without adding in that state actually limits how much you can donate and get a tax write off... and to make it even more complicated- when you getting a tax write off, it doesn't mean you are not paying taxes of that amount (which you donated), it only means that the donation isn't getting taxed. So for example if I am taxed at 10%, and I donate 10$, that doesn't mean I now don't have to pay 10$ in taxes, but it means I won't have to pay 1$ (10% of 10$)... so I am not saving anything there.
Hi Sorelle, loving your videos. This is why I got so disillusioned at Art School, that and being terrible at art... You should do a show on NFTs, the not-so-secret art scam.
Agreed! Something on NFT's would be fantastic. 👏
Dude, she's pushing her own NFTs on IG and FB trying scam her own followers into shelling out money for them.
@@internettoughguy
Wow! That is something else... I guess people will do damned well anything to make money, regardless of the morality of it. That's too bad.
@@skyeblu817 What?
Mate she's pro nft. Also in the scamming business herself, her courses sell for 800$ per year.
@6:49 You haven't saved $9,750,000 in tax, You have reduced your taxable income by $9,750,000. Most countries have a maximum income tax rate of around 50%, Capital gains tax is usually less than that. The increased value of the painting would be capital gains. So, the max tax savings would be about $500K. Here in the USA you can only deduct the purchase price of the item and you have to have a receipt. You could donate the painting to a charity auction then you could deduct the price it sold for from your taxable income.
It actually gets worse… ghost artists are a thing. I’ve met one who shared how she was paid a set amount to create a piece of art for a famous artist
That's existed forever. Take a look at the Renaissance masters and how much some of their "assistants" did.
And there's also Hunter Biden..................... funny how he became an "artist" at exactly the same time his overdue tax bill was going to be paid. I'm curious how many of his pieces were "donated"
Wow, an Eye-opener for me!!! I knew it was wrong to have these super-inflated art markets, but never looked into anything! It's a good feeling to have real people enjoy your work for a realistic market value!
Thank you! As artist and curator I know exactly what you are talking about, but..
This happens in many industries, but in Art it is very blatant indeed.
A serious flaw in your logic:
Institutions don't just accept donations of art that has been artificially hyped in terms of reputation and value. Even free donations come with a massive cost to the institution: insurance, storage, scholarship and research, inevitable restoration. So, any institution that has longevity as its goal would be prudent in terms of what it accepted.
Institutions are run by, or are answerable to, boards who would scrutinize bequests and donations. Many people on these boards would not have hands in the art market, but would definitely have their own reputations to protect. Them signing off on whimsical acquisitions would be career suicide.
So, maybe, if you're going to make such sweeping yet serious allegations, you should have more quotable proof? Or are you just retreading 'Adam Ruins Everything'?
It’s sad that such ignorant views are so easily believed.
Famous art collector buys pieces from art school graduates, meaning that they instantly become notable artists and the pieces are now worth millions. Some years later, the warehouse in which this "art" is stored mysteriously burns down. Hello, insurance payout that could buy you a nation. Not at all suspicious!
This is a live replay of the classical fairy tale "The Emperor's New Cloths" and explains why something that is at best is mediocre gets classified as "fine art".
The "experts" need only declare that the art is outstanding for the gullible that don't want to be seen as the only ones that can't see the Emperor's cloths, to swallow it hook, line and sinker.
Thank you for covering so many parts of the financial world.
No problem! I do my best.
You deserve more views and followers. I was just having a conversation about this with my husband last Sunday. I will send it to him now! Thank you for making this video!
Wow, such a cool and eye opening episode! Thank you Sorelle! I’m an artist, and now it makes so much sense why a crappy painting that doesn’t take too long to produce can worth millions of dollars!
However, I would like to be discovered by one of those billioner art collectors 😂
you will.
@@parteibonza haha, thank you:)
Tatiana you may need to start licking or sucking up to specific people in the so called art world then.
You need to be as cunning, deceptive and conniving to get in.
Even then you won't ever get into the inner circle of corruption. As Sorelle states in the video multi-millionaire Radcliffe had a "hard" time as stated in the video, but I reckon he's right in there now. He's absolutely been schooled on how to keep his millions away from the taxman via fine art.
@@barryhercules6486Agree, I guess this is a valid suggestion, but it totally goes against my moral values!!!! So, no thank you.
@@tatibee1234 It's against most of our values - but at least we know the scam behind the ArtWorld now... Thanks Sorelle...
My friends Dad, was the painter Wayne Theibaud. His paintings are pretty valuable, and he was sickened by this whole racket… during his late years, he started painting clowns, as he knew they would be a hard sell in the gallery world. 😂
Oops, you just let the cat out of the bag. This has been going on for at least a century, and it's the main explanation for modernism.
This is the sad reality. So much talented art goes unnoticed, while garbage gets the spotlight because the artists have sold out and are in the same circles of these tax frauds
Banksy.. a sold out pawn.
Sazm G you too would sell out if enough cash were waved in front of your face
You speak truth.
I used to house share with a group of very hard working, very intelligent artists. None of them made it, and they all went into other careers. Its a rigged system where arbitrarily investors and galleries will pick people and propel them to stardom. It is entirely non-meritocratic. One female artist mysteriously got very successful after spending some "quality time" in the toilets with a famous art buyer at a gallery show. Becoming a super famous artist probably has more in common with the casting couch and onlyfans, than any romantic fantasy about living the life of an artist.
Btw did you realise you and the Turkish actress Beren Saat look like siblings?
I don’t see the resemblance. Beren Saat resembles more of a young Catherine Zeta-Jones to me, though.
I was JUST talking about this yesterday with my family- my dad has worked in the art industry forever and has gotten almost no gold that he was promised, after years nad years of work. I'm sure only 1% of the art in circulation is legit. There's so many interesting documentaries about this.
First, if you donate $10 million in art; that's 3-5 million in tax savings (not 10 million like she claimed in her example.) Second, you can only reduce taxable income by 1/3. So, if you have a $15 million dollar tax bill; donate $10 million in art and you'll only have $10-12 million in a tax bill. Second, her claim that you can't buy a picasso at auction because Daniel Radcliffe couldn't buy a painting from a dealer; Radcliffe called the artist and got the painting and anyone with cash can buy at an auction (they might check bank balances if everything is $50 million and reporters are trying to sneak in, which would take up seats that buyers might want.) Finally, I'd love to interview publicists and find out if they can make a nobody into a star for $100k/year. I do know that OJ must have a good publicist as he seems like a nice guy who killed his ex wife, but anyone who knows him has nothing nice to say about him when their friends ask what he's like (again, he must have a good publicist; but people are already asking in that case.)
Plus there are legions of easier ways to dodge taxes. This ArT iS a TaXsChEmE is such a meme.
@@lordbunbury It's a bit ridiculous: language of a conspiracy theory on a level
What people also don't get about it is that, you also lost the money you donated. It's not like it made you money, you're OUT $10 million dollars. People always love to say how rich people can just "write it off" like it means it's something that is the greatest benefit. Many times, you have more money in the bank paying after just paying the taxes vs some large donation or business loss.
@@cchavezjr7 you're not doing the math. In this scenario, the buyer is not losing $10MIL because they bought the painting at only $10K so they're "only" losing $10K PLUS what they paid to have it promoted (a couple $100K). So they're GAINING money in tax write offs from the donation. And as the person above said, the amount they get from tax write offs is not exactly $10MIL, it is a portion of that. But STILL they are GAINING money not losing it.
@@cchavezjr7 The painting is essentially worthless. No one is going to pay 10 million for it. The only way to milk some money out of it is to donate and write off your taxes.
I had always assumed that modern art sales were being used to launder money
This has to be the same type of scheme driving the NFT BS!
I know these celebrities' "millions" spent on NFT's could just be relatively small to their "fortunes." But I also have the suspicion that these celebrities aren't stupid enough to spend these "millions" on such ignorance.
Too funny. Same thought occurred to me about halfway through. Sad really.. the origin of crypto was too free people from the banking system but in the end it just became a scam.
Sorelle is trying to get in on the scam by pushing her own NFTs on IG and FB. She's trying to profit of her followers. Did you know this?
This is a new concept; '...celebrities aren't stupid.' Where did you get that information - we usually see just exactly the opposite.
@@internettoughguy provide link. Otherwise I don't believe it. I just checked her IG...nada about NFT's.
@@sirebrawl2404 She's deleting comments. I saw ITG's other comment in another thread a few days ago and now it's gone.
The candid unpacking of the process is revealing. As a genuine art lover it's disgusting to learn about the scam.
As an artist entering the 5 figure price range for my originals, I'm reminded by videos like this that I still need to raise my prices!! 🤣 The shady depths of tax scams are deep, but I think any artist can admit to the desire of wanting a millionaire as a collector. Hopefully, they would actually display it, instead of it growing old in a storage warehouse. Great video, you might like the Netflix documentary called "Made You Look" 👍🏾
You should know that it's who you know then.
The quality of the art is actually irrelevant.
Which explains why the majority of expensive art is literally rubbish and the critics spout waffle in praise of it.
High profile Tax Scams.
They are turning art into an elite thing, and are making the artist become a product. One of the big question raising here is: what is art? What is it for? None of that nonsense, that's for sure!
@@marionlecrayon7357 It's been that way for decades Marion, if not Centuries... Do you think the Mona Lisa was created for the enjoyment of the "so called" peasants of that Era ? There are many down to earth examples, but the Elitest aspect of art has existed for centuries...
@@barryhercules6486 Yup, the net worth is in your network 🙌🏾 Totally agree, it's about who you know! 💯
Just watched "Made You Look" - really interesting!
This was super interesting. One question, though: If artificially turning these "up and comers" into famous artists is all a scam, why are people later on buying their work for tens of millions of dollars. Surely folks that spend that kind of money on art are aware of this, right?
That is a very simplistic version of a scam that is much broader and deeper. The artist's that get recognition do so because they are complicit in the racket.
Fine art auctions benchmark and set the value and convert canvas in to a transnational non taxable
Liquid asset that can be stored, used in lieu of cash currency and liquidated, borrowed against with just a discreet phone call.
Shares without the cares, to use an insider expression.
The museums only get a framed copy to validate the asset and claim the deduction. The originals stay with the owner.
But the real value of the art is hidden beneath the paint. Information. Very valuable Information. Incriminating, technical, blueprints etc.
Great video. I would love to speak with you further about this.
8:47 - Many works of art are stored in freeports (particularly in Europe) to avoid VAT, Value Added Tax. But there are also political and personal reasons a collector may not feel safe having their assets known to their country, or to their greedy family.
9:00 - I recommend my own book (shamelessly) - The Bouvier Affair: A True Story, which talks about the real people who use this world.
9:32 - The reason the Geneva Freeport is the largest is because it's the OG. It's the model that informed the others, originated from the need to store shipments like grain across European countries overnight without paying tax. It's also state subsidized, and in full view of the outside world. Plus, there is a section that has non-VAT items.
9:40 - The collector in my book stored his own artworks in Geneva. His collection actually included Klimt, Da Vinci, Renoir, and Van Gogh all at once.
Buy my book kthnx
Okay but Mr Bean is legitimately a great artist 🧐😆
Damn right!
This is, no exaggeration, the most 'OMG' video I've ever seen on RUclips, and, sadly, I've watched untold thousands of videos. Seriously, this is an excellent exposure of a subject that I thought I knew of but actually had no clue as to the reality of it. Wow. Thank you.
Sorelle, you are my idol! You are an absolute ICON. Your journey has been so inspiring. Thank you so very much for everything you've done, for sharing your life & insight, and the truth you bare. Also, those overalls, girrrrlllllll🔥💖 Much love from New York🗽
Aw thank you, that's so lovely to hear. Much love from Iceland!
She is telling the truth, I was once in the mix of those people, and they showed me a little bit how they do it. Everything she says is correct.
I find it hard to believe a deduction could be taken that exceeds the actual cost of the painting. You’re out $250K how is the IRS gonna allow you a $10M deduction? You are giving the appreciation away not experiencing it as income at any point. You would first have to claim the $10M as income to then turn around and deduct it as a charity expense.
May this construct of a nichè the VAT back on expected gain may :(
Because it doesn't work like this. Besides it not counting as 10m write off (as in expense, not as in "I now don't owe 10m in taxes), you are also limited by how much you can donate and write off (and the number is pretty low)
In Canada artists used to donate their work (decades ago) and received a tax credit for the retail (appraised) value of the painting. Now, the tax rules only allow the cost of materials.
If a third party donates art, there is a minimum time the owner has to have owned the art (I think it's 3 years, but it might be more), and when they donate it only get the lower of what they paid for it or what the charity sells it for (after costs of sales).
Incredible. Thank you. Please keep this going.
Will do! We're aiming to do a lot more videos like this in future.
Samsung CEO died recently and his son took the throne. By the way, a lot of art was donated.
powerful, especially how you said someone aka the general public has to pay that tax that's being avoided being paid...
Question: Who is actually being scammed here?
- Is it the government being scammed out of the tax dollars they are owed? Well, not really. The government is willing to let charitable donations be deducted from taxes, which seems like a reasonable thing to do. And in this scenario the charitable donation really did take place, so it seems like everything is above board here.
- Is it the artist who's work is being used to run the scam? No, the artist is happy because he's getting all kinds of free promotion out of the deal.
- Is it the other buyers of the artist's work who now have to pay more than they otherwise would on account of the pumped up value? Maybe-but on the other hand, they probably wouldn't have ever heard of the artist if not for all the promotion the rich benefactor paid for. It will always be the case that popular stuff is more expensive, and it's easy to say in hindsight that you should have bought in when the price was lower. But the reason the price was lower before is precisely because not very many people wanted to buy back then. That's just how popularity works.
- Is it other artists who have to compete against the one being pumped up artificially by the rich benefactor? This one seems closest to being right, but then, popularity as an artist is not exactly a meritocracy in the first place. If it wasn't rich people making artists popular, then popularity would be effectively dumb luck, which hardly seems better.
So, honestly I'm not convinced that what's happening here is actually bad. Promoting artists with a lot of potential who might not otherwise have been noticed seems almost like a public service that someone should be doing and would deserve to be compensated for. Maybe that's a hot take-I don't know. I'd be curious to hear anyone else's thought on this.
Answer Tax man & artist. The museum gets a painting they don't want and have to pay to store/insure and are often restricted from selling it. But even if they could there would probably be no buyer - certainly not at it's 'listed' value. Artist is ok, but only IF they are able to sell anything at an inflated rate while the going was good - otherwise they would be said to have 'lost it' and the gallery would move on.
@@manofkent4472 Hmm... it sounds like you're imagining there will be a precipitous drop-off in the value of the art after the benefactor stops pumping it up. I can certainly imagine there will be some drop-off, as nothing can be at peak popularity forever, but do we really think that the value will plummet to the point that nobody wants to buy at all? To the point that the artist is worse off than they were before all the free publicity? I guess that's an empirical question which I don't know the answer to, but I find it kind of hard to believe.
If we were talking about something other than art, I would totally agree with you. Like pumping and dumping stocks is clearly a scam, because there is ultimately a real company producing value behind the stocks, and pumping the stock basically amounts to lying about its value.
But for art, the perceptions are all there is. It's not a lie to say "so-and-so is the next big thing"-it's just an opinion. And that opinion becomes the reality if enough people agree with it. Then, once as artist has been deemed "noteworthy" by the art world, I see no reason they couldn't continue to ride off that forever. I mean, a lot of people think Damien Hirst's art is bad, but that hasn't stopped him from continuing to be a big name and earning loads of money.
I basically know nothing about art, but I love going to galleries and have been fortunate enough to go to some of the great ones around the world to see some amazing pieces.... knowing that there are many wonderful pieces that nobody will ever get to see and enjoy because they are forever hidden away in vaults is incredibly sad and disappointing. I'm sure many of those artists would not want that for their work. Just another by-product of rich people's greed I guess.
You say you know nothing about art but surely visiting a gallery and enjoying it is what art is all about in its purest form. Would you buy a local artists work for $50 and display it in your hallway? You would be essentially hiding it away from everybody except close friends and the occasional plumber.
@@bmmaaate yes it is, which is why I'm sad that all these valuable masterpieces are locked away so nobody can see them.
And displaying a $50 piece of art at home is far different to locking away a centuries old masterpiece so that nobody can ever see it, it's not like they are on display in the vault for even the owners to enjoy them is it? They are locked away in storage.
Okay, I'm an artist and I have been all my life & even ran two art galleries in Paris, on the Isle Saint Louis. The owners of the galleries had no clue about this but they were small galleries. I also know a lot of good artists who make an average income however I also know those who make a lot. The ones who make a lot are not necessarily plugged into this system, they just work hard and do great art & consider themselves very fortunate to be picked up by the people you are describing. It does exist, it's real and it's unfortunate that the very rich bring art into disrepute by doing this.
However there are tax benefits to normal people who buy art too if they do it through a company. Dentists in Paris have caught onto this as there is a law that gives them a reduction in taxs if they buy art and display it in a public location, their reception area. In Ireland there are also benefits though I'm out of touch with that now. I will share this on facebook. I don't think it really helps real artists in a practical way but it might start a constructive conversation. The artists who follow me won't be thanking me for it, even though they don't benefit from this craziness but they might hope to :)
Which is foolish, as this actually undermines the real value of art.
It didn't take more than an hour for the vitriol to start. Name calling and insults on facebook. I actually had to block someone whom I know is 'attempting' to be recruited.
@@artytomparis Wow interesting 🤔 I shared this a few minutes ago so curious to see the reaction from some of my arty friends and others…I’ve been doing a business course in art that a very ambitious artist I know created and has made six figures from in the past year and she encourages us all to basically shoot for this but spins it in a good way as if it doesn’t really matter that it’s a huge manipulation as long as you get the bag!
@@lucibloom5966 Yes well that's like suggesting that someone goes out and buys lots of lottery tickets and sleeps with the shop keeper too. That's the problem with the art world today. It's completely normalized to behave that way.
I worked as a researcher for an art appraisal firm, and this is spot on. Often if someone doesn’t “like” the firm’s appraisal they’ll simply shred the documents and go to another firm for an appraisal more to their liking.
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For someone who doesn’t understand economics or finances I’ve actually been aware of this without knowing
I don’t know how many times over the years I’ve looked at very expensive art and said I would never pay that
It looks like someone scribbled on their book
If that was done by me a nobody I’d get nothing
But because it’s a high known artist all of a sudden it’s extremely valuable
The only difference is the name
Now I know why
YES!!.. OUR PRESIDENT HAS A VERY TALENTED ARTIST NAMED HUNTER!! 🤣🤣🤣
Hahahahaha!
Haha this!! 🤣
@@4TheLoveOfThriving 😃👍❤
@@skyeblu817 WHAT??
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Com'on man 🤡
Just as I thought lots of art in galleries are rubbish they just got made expensive by rich people
You don't save any tax dollars in your example. Because you earned 10M - 275K - 10K = 9.7M and donate 10M, so your total loss is just 285K. You can't offset the tax losses with this example. Because you gained the value of the painting which shot up from 10K to 10M. You have a taxable gain (when you sell) in 10M. If you had sold the painting you would owe (10M - 275K - 10K) * (federal tax + state tax + commission to auction house). If you donate 10M again you have not offset any other gains since you made about 10M on paper.
“It’s a BIG CLUB, and you ain’t in it!” - George Carlin. Never a truer word spoken.
This is very Sad - because there are a lot of very talented artist that never see the light of day in the market - because of these gatekeepers- /the real cost is the culture and richness for humanity that will never be appreciated because of the greedy a holes 🕳 trying to save on taxes 🤬🤔
I am a sculptural artist and I knew about the tax scam and buddy system of the elite corporate artist community...and that is why I know that my ability to break into the art world is limited. There are so many super talented artists that get ignored because they are not connected to a "collector." We as artist need to end this system and get back to real working artists and real art lovers that buy true works of art and not crap on a canvas and hyper inflate the price for tax avoidance.
Make your own art world. Rent a space with other artists and put work on display and hand out some cheap plonk at an opening night. I saw a guy pay $400 for a blue splash of paint in a tiny gallery not long ago. It's not $4mil but its a start.
"... so this is the part where we make the artist famous and we have to boost the value of the art to feed that."
Now I know how a "con artist", like Damien Hirst, became "famous". 🤣
I think a lot of artists would have appreciated at least an acknowledgement of the many honest, hardworking artists out there - even in these upper echelon elite art worlds. There ARE various reasons some art does become legitimately valuable, and these bad actors are muddying the waters with their schemes.
Thanks for the video, Sorelle. I've been wanting to ask you about this for a while and wondered if you'd perhaps address it in a video. I keep hearing that having money in the bank is this bad thing however if our levels of cash aren't quite enough for proper investments, what would you advise?
I can't advise you what to do. But what I do is keep just what I need in bank accounts to invest, and a little for an emergency fund. But whatever I don't need beyond that goes into what I consider real money; things like gold, silver, crypto, and property.
@@Abundantiaco Thanks for taking the time to respond, Sorelle. I appreciate it. I wish to make clear, I wasn't asking you how to spend my own money. That's each person's responsibility. However, for those people who perhaps don't have enough just yet to invest in a property, I do wonder if going into crypto and precious metals is a wise move. Very hard to know in this quite turbulent and very unpredictable climate.
@@mariarossi6719 I’m in the same boat. I decided to buy canned food with the small amount of cash I have. It’s practical and of value. You can trade food as currency if the dollar collapses. That’s one good thing about food over gold. Everyone needs it and it holds value that way.
I know a very famous Asian artist here in Paris, he's in his early 80s now. He came from a very wealthy family. He studied philosophy in Japan and in Germany, so he knew how to talk up some good bullshit (he is not Japanese). When he started making conceptual / minimalist "art", he organized exhibitions in galleries, gave money to his friends to sell out the shows, bribed art critics to write positive reviews. As his reputation grew, so was he able to bribe higher and higher grade of critics. And because he comes from a powerful family, eventually the very powerful friends of his family bought his work (that he didn't have to give money to), and important museums in America, Europe, and Asia bought his work for their collections. An example of his "art", which I saw when visiting his studio, is a huge white canvas with a single black brush stroke. There is a long waiting list of collectors for these "paintings" which sell for around half a million, but the "artist" only produces about 20 of these per year.
The "real artists" in this con game are the dealers, museum curators, collectors and the art critics who conspire in making highly effective conceptual art.
Love your videos, but I don’t think the tax code works exactly like this in US and many countries. The gain from purchase price to donation value is also a capital gain and so the high donated price would be counterbalanced by the taxable capital gain. You could however, in US, bequest the art to children upon death and their later donation would have the cost basis readjusts upon the parent’s death.
The very rich, especially large corporations, use different methods entirely unavailable to mere millionaires. Examples are corps owned in different countries with profits shifted to the zero tax country while losses sent to the US corporation. Then the overseas Corp “loans” the profit back to the US Corp. There are also many specific loopholes written into law for the extremely wealthy. You could consider though that the rich still often pay a lot more in tax than the benefits they get. The real issue IMO should be stopping rich, or poor, who leech off of others.
@X in the US it would be the donation which would trigger the capital gain calculation which would be subtracted from the donated value. So ultimately only the initial purchase price would count as a donation, unless the art was inherited and then the “base value” counted as a donation would be the estimated value at time of inheritance.
@X it probably works in other countries and it works in the US if you bequest the art to your children
Having gone to art school in the early 90's , the era of Tracey emin and damien hurst , I was aware that it was not what I had been led to believe an art school was. I was 16
I finished a scam series that's hot on Netflix today and now I'm sad about art too. This was super interesting and so well and easy to understand explained! 👏👏
What’s the name of the series?
having studied art and known genuine talents it is obvious how many talentless or extremely weak talents with connections are the ones with a career nice to see the financial reasons and to have confirmation of shallowness of so called experts
VIOLA!, the saddest of the string instruments because it isn't spelled Voila :
Hahahaha... yes. Indeed.
Brilliant comment.
Haha! I thought the word looked strangely unfamiliar when it flashed! 😅
I love your channels Sorelle. You are killing it !!!
Very interesting, thanks for sharing this information.
What I understand is that all these things are actually coping mechanisms to deal with a problem. The problem/or cause being the TAXES ... which in my opinion are simply theft.. Why ? Because no one has signed any contract with the tax collectors, which themselves are registered as companies (governments are registered companies, banks are mainly private, and the federal reserve is a bunch of mafia bankers, bribing politicians)...
And when we don't have a signed contract with a company, we actually don't owe them anything. Not a penny.
The tax-system is held in place by our - the people's - belief in it. We believe we should pay taxes in this way. But taxes are enforced upon us. And we, the people, like to be free and sovereign. And no other people or corporations have the right to steal from us, under the invented name of 'taxes', and by selling a story which is actually a big lie. They are doing this to control us, the people.
I think we should rethink this tax-system, we should only pay what we agree to pay voluntarily, and for the projects we want to support (or for the services we individually need, that have to be payed from collective money)
So instead of constantly trying to find coping mechanisms, shouldn't we just get rid of the problem ?
I think there is a rise in consciousness and knowledge needed (which is slowly happening at the moment), in order for the people to stand up and say NO to these corrupt and enslaving systems,...
Thank you again, have a great day ! 💖 .. Greetings from Holland x
Your comment reminds me of a tax system that was very close to what you described.
The Tax was 2.5% of sitting/dead capital that was not used for a year. This was to ensure people did not hoard the wealth but put it to use so that it creates growth in the economy by ensuring velocity of money. The Tax was collected purely for welfare purposes. Anyone who could not afford something, would go the governor of his area and will have his/her needs fulfilled.
INTEREST was ILLEGAL in this economic system.
This economic system was in practice in one of the largest and longest lasting empires in the world that was based on knowledge and peace and prosperity.
The Islamic Empire.
The KEY to the problem is not taxes. It is the INTEREST based economic system.
Even the economic professors agree that Interest is the most destructive economic tool ever. Taxes is the by-product of interest based economy. Because as the currency loses value (which is caused by Interest), the government has to impose taxes to meet the shortfall to do their job.
@@SeekDaTruth Yes, I looked into that in a superficial way years ago and came to the conclusion that a lot of the reasons for wars between the west and east was because the western banks are basically bankrupt. They live on debt not wealth and they exist to enslave each other. There's nothing they would like more than to expand into new territory where there wasn't any existing debt system. It's very perverse.
Poetry..
Your comment would make more sense if you had your own personal roads, schools, police, fire department, military, water treatment plant, and food inspectors. Do you have those things? What planet do you currently live on where you can afford all of that infrastructure? In fact, you made the comment on the internet. Remember who paid for all those fiber optic cables? Hint: It wasn't Time/Warner.
@@barnabascee1889 Many of the things that you consider important infrastructure are dehumanizing, technocratic tools. Not resources.
Having spent almost 40 years in the contemporary art market, I have no dispute with the claims in this well-presented, nicely-paced, and succinctly explained video. The rot at the top of the art world's food chain is very real, but we must be careful not to paint all artists, galleries, museums, and collectors with the same brush. The vast majority are hard-working individuals squeaking out modest incomes who share a passion for arts for the enrichment of our communities, not for their direct profitability through sales or indirect profitability through tax savings.
Over the past century, the art world has become just one of the many conduits the ultra-wealthy have utilized to increase their wealth. Let's be clear: the villain is NOT the art world, rather the manipulation of any industry by ultra-wealth individuals and their political partners who will always be the root of the problem. We should be pointing our fingers at these dirty players simply because they are already filthy rich and yet still greedy for more. The methods discussed in the video are all long-play schemes, not overnight get-rich plans. Any person who can take advantage of these donation and tax deferral schemes is quite likely already in the top 10% of wealth holders. I say blame them, not the struggling artists or small gallery owners.
The worst offenders utilize tax loopholes and profit from financial deregulation in countries where fiscally conservative politicians purposely devise tax code that favors the high-wealth individuals who bankroll their political campaigns. Truth be told, the most evil financial lie of our time as mentioned by the video poster is not the art world. It's these politicians, their dark donors who abuse them as puppets, and the small cabal of sycophants in the art industry who facilitate the system by conspiring to alter the trajectories of certain careers. Lest we forget, similar systems exist in almost EVERY industry. This is NOT specifically an art world problem. A couple handfuls of rotten apples are ruining the barrel for everyone else.
99% of all art world professionals do not circulate in the rarified air of the pinnacle. We can't afford to manipulate winners and losers like the closed circle that perpetuates the cycle described in this informative video. We have been calling out this practice for decades and have been crying for regulation for at least as long. We insist that it's not the art world that is evil, rather it's the politicians together with high-worth individuals who will stop at nothing to bilk any unregulated system for personal gain.
It is an absolute fantasy for anyone to believe that the art world itself created this gravy train on its own. In fact, the art world is being held hostage by the real culprits, very few of whom work in the art market. Why is the art world being held hostage? Simple, if politicians closed tax loopholes and regulated the market so that egregious profits through tax savings from donations couldn't be made, the ultra-wealthy would look elsewhere to park their capital literally overnight. In so doing, the upper echelon of the art market would tank. To be honest, I and many others would find this to be a preferable outcome because the playing field for everyone else would eventually be more balanced and less controllable by small groups of influencers like it is now. The total art market would shrink drastically, but in the long run, I believe it would create a healthier, more democratic, and more sustainable market based more on merit than on money.
Recommendation: A suggested companion piece could be to discuss the effects of art speculation and flipping of emerging artists, a process that has decimated the careers of hundreds of young artists long before their time.
There is also the phenomenon of faking famous antiquities and just displaying the fake in a museum, while the wealthy benefactor gets to keep the original in his own collection. Any thief would discover this to their cost.
I think sometimes this is also done to protect the original, right? But I bet a lot of sneaky stuff definitely happens in this regard as well.
This kind of "scam" is just one of several reasons I can't get upset when (infrequently) an art "forgery" scheme comes to light. We have no way of knowing how many works of art are out there that are not what they're purported to be. Many so-called "experts", who claim to be able to judge a painting based on brush strokes or canvas appearance, are likely in on the fraud, and authenticate artworks that are very good replicas, but fake, for a price. Once a painting is "accepted" as real, it's to the "experts'" best interests to fight tooth and nail to protect their "reputations".......and these experts scratch each others' backs to protect their "system".
That was the high end scam, but I assure you, that are many other scams at lower levels
Please spill. It's exceedingly interesting stuff.
You won't tell us? 😁
@@flazeda8743 Sorry, I must leave that entirely up to your own "criminal" mastermind to figure out. It is not very difficult.
@@artm8dk Oh okay I thought it was some secret art world tricks not revealed by investigators yet. Have a good day! ☺️
@@flazeda8743 There is one important factor here. You have to develop " the eye" , the abillity to know that is art in the first place. Once you can do that a lot of options will be open.
Also helps explain why prestigious art education is so expensive. Going through the process is what gives you a "name" and makes you investable.
The public find it funny that art school graduates speak in incomprehensible jargon and pose as all sorts of radicals, but that's an essential part of the misdirection that hides the tax scam.
Did she uncover a nasty secret tax scam or did she teach us a useful tip for when we eventually become millionaires.
I'll let you decide.
OH yes, you have many times the likeliness of being struck by lightening than becoming a millionaire.
@@jmitterii2 No it's easy. Just find a young artist, buy their work, convince everyone it is worth way more, sell it for millions... boom! You are now a millionaire. It's so simple.
Not gonna happen
Considering the trash that gets sold at incredible high prices there is no way someone would actually want crap that would make even Jackson Pollock blush in shame without some ulterior motive.
Using art to free humanity from the slavery and bondage of taxation and government, while also launching the careers of undiscovered artists all around the world? Unbelievably based.
This is one of the most interesting videos i've seen the last year. Please keep going with such amazing insights!
Tax evasion is good, morally correct and beautiful.
Just the honorable thing to do!
@E A One way to deal with idiocy is by reading good books.
I suggest you start with Anatomy of the State by Murray Rothbard.
If you don't get it after finishing this one, just come back and I may suggest you more good readings, if you ask politely.