How do you pay $41m in taxes on a painting which can't be sold?

The value of a painting is how much you can sell it for. But Robert Rauschenberg's "Canyon" is illegal to sell, leaving the Sonnabend estate in a pickle.

When modern art dealer Ileana Sonnabend died in 2007, her family had to sell a heck of a lot of paintings to pay their inheritance tax bill. They eventually valued the total estate at $876m, and had to say goodbye to works by Lichtenstein, Warhol and Twombly to come up with the $471m they owned.

But one of the most important paintings they owned was valued at $0, in a move which has led to the IRS (the Internal Revenue Service, the American tax office) taking them to court for to reclaim a further $41m from them. But this is not tax evasion gone wrong. The painting is quite literally priceless – or perhaps more accurately, valueless.

The work, called Canyon, is by American pop artist Robert Rauschenberg. It is a mixed-medium canvas, featuring "oil, housepaint, pencil, paper, fabric, metal, buttons, nails, cardboard, printed paper, photographs, wood, paint tubes, mirror string, pillow" – and a stuffed bald eagle:

Since trafficking in the bird, a formerly endangered species and national icon, is illegal whether it is dead or alive, the painting cannot be resold. In fact, Sonnabend had to obtain special dispensation to lend the work to museums, and even keep it at all, once federal agents spotted it in 1981.

Now, as any economist knows, there is no such thing as intrinsic value. An item is worth what it can be resold for. It's value certainly isn't what you paid for it, as anyone who bought a full set of Charles and Diana wedding memorabilia will attest to. And neither is it what it would be in a different, hypothetical, situation. If I own an autographed copy of Sticky Fingers​ which will be worth a lot "when (if?) Keith Richards dies", that's all very well, but it's not worth that now.

All of which is to say that if you own a painting which cannot legally be sold, and which can only even be retained through a rarely competent bureaucratic exemption, it is pretty fair to describe it as worth $0. (Although a more accurate valuation would be [sale price in an open market]x[probability of the restrictions being lifted], but if the latter is zero then the whole thing is as well). But the IRS, apparently, don't agree. They claimed to the estate's lawyer that:

There could be a market for the work, for example, a recluse billionaire in China might want to buy it and hide it.

Yesterday, the New York Times threw some light on how they actually reached their valuation:

That figure came from the agency's Art Advisory Panel, which is made up of experts and dealers and meets a few times a year to advise the I.R.S.’s Art Appraisal Services unit. One of its members is Stephanie Barron, the senior curator of 20th-century art at the Los Angeles County Museum of Art, where "Canyon" was exhibited for two years. She said that the group evaluated "Canyon" solely on its artistic value, without reference to any accompanying restrictions or laws.

"The ruling about the eagle is not something the Art Advisory Panel considered," Ms. Barron said, adding that the work’s value is defined by its artistic worth. "It’s a stunning work of art and we all just cringed at the idea of saying that this had zero value. It just didn’t make any sense."

Reuters' economics blogger Felix Salmon, who harbours part time fascination with the art world, doesn't think too highly of Barron for this:

The assumptions baked in to this are both jaw-dropping and entirely unsurprising at the same time. Barron is the senior curator of 20th-century art at Lacma, which puts her at the pinnacle of the non-profit art world, the place where art is supposedly valued just for its own sake and not because it’s worth lots of money. And yet, faced with a literally priceless work of art, Barron and her fellow panelists “just cringed” at ratifying precisely that concept. If a work has great artistic value, in Barron’s view, it must have great financial value as well. And, conversely, if a work has no financial value, then it cannot have artistic value.

Salmon is right that there is something peculiarly specific to the art world in this error, and that's what he focuses on for the rest of his very good piece. But it's also representative of a more widespread form of economic illiteracy. Take, for example, arguments around the introduction of a wealth tax.

The idea is that since a) inequalities in wealth are far greater than inequalities in income, and b) wealth is a better indicator of "richness" than income (people rarely have temporary spikes in wealth, for instance), then we ought to be collecting a tax on wealth (of, say, half a per cent of total wealth over £1m per year).

This is all good, but the problem comes when people start comparing liquid and illiquid assets. Much – most – of the wealth of the richest Britons is tied up in land and property. Unless Inland Revenue want to start collecting percentages of houses (and it's unclear what they would do if they seized, say, your front porch) then some people are going to have to start selling those homes, liquidating their assents.

When there's a glut of properties on sale, the value falls. If the value falls, the value of what can be taxed correspondingly falls. There is no such thing as the "true" value of someone's wealth which the Revenue can address, and if they do, they end up with cock-ups like the IRS's. Let that be a lesson to them.

A noble, majestic bald eagle, indirectly responsible for a $41m tax bill. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Why does the medical establishment fail to take women in pain seriously?

Women with mesh implants have been suffering for years. And it's not the only time they have been ignored. 

Claire Cooper’s voice wavered as she told the BBC interviewer that she had thought of suicide, after her mesh implant left her in life-long debilitating pain. “I lost my womb for no reason”, she said, describing the hysterectomy to which she resorted in a desperate attempt to end her pain. She is not alone, but for years she was denied the knowledge that she was just one in a large group of patients whose mesh implants had terribly malfunctioned.

Trans-vaginal mesh is a kind of permanent “tape” inserted into the body to treat stress urinary incontinence and to prevent pelvic organ prolapse, both of which can occur following childbirth. But for some patients, this is a solution in name only. For years now, these patients – predominantly women – have been experiencing intense pain due to the implant shifting, and scraping their insides. But they struggled to be taken seriously.

The mesh implants has become this month's surgical scandal, after affected women decided to sue. But it should really have been the focus of so much attention three years ago, when former Scottish Health Secretary Alex Neil called for a suspension of mesh procedures by NHS Scotland and an inquiry into their risks and benefits. Or six years ago, in 2011, when the US Food and Drug Administration revealed that the mesh was unsafe. Or at any point when it became public knowledge that people were becoming disabled and dying as a result of their surgery.

When Cooper complained about the pain, a GP told her she was imagining it. Likewise, the interim report requested by the Scottish government found the medical establishment had not believed some of the recipients who experienced adverse effects. 

This is not a rare phenomenon when it comes to women's health. Their health problems are repeatedly deprioritised, until they are labelled “hysterical” for calling for them to be addressed. As Joe Fassler documented for The Atlantic, when his wife's medical problem was undiagnosed for hours, he began to detect a certain sexism in the way she was treated:

“Why”, I kept asking myself, when reading his piece, “are they assuming that she doesn’t know how much pain she’s feeling? Why is the expectation that she’s frenzied for no real reason? Does this happen to a lot of women?”

This is not just a journalist's account. The legal study The Girl Who Cried Pain: A Bias Against Women in the Treatment of Pain found that women report more severe levels of pain, more frequent incidences of pain, and pain of longer duration than men, but are nonetheless treated for pain less aggressively. 

An extreme example is “Yentl Syndrome”. This is the fact that half of US women are likely to experience cardiovascular disease and exhibit different symptoms to men, because male symptoms are taught as ungendered, many women die following misdiagnosis. More often than should be acceptable, female pain is treated as irrelevant or counterfeit.

In another significant case, when the news broke that the most common hormonal birth control pill is heavily linked to a lower quality of life, many uterus-owning users were unsurprised. After all, they had been observing these symptoms for years. Social media movements, such as #MyPillStory, had long been born of the frustration that medical experts weren’t doing enough to examine or counter the negative side effects. Even after randomised trials were conducted and statements were released, nothing was officially changed.

Men could of course shoulder the burden of birth control pills - there has been research over the years into one. But too many men are unwilling to swallow the side effects. A Cosmopolitan survey found that 63 per cent of men would not consider using a form of birth control that could result in acne or weight gain. That’s 2 per cent more than the number who said that they would reject the option of having an annual testicular injection. So if we’re taking men who are afraid of much lesser symptoms than those experienced by women seriously, why is it that women are continually overlooked by health professionals? 

These double standards mean that while men are treated with kid gloves, women’s reactions to drugs are used to alter recommended dosages post-hoc. Medical trials are intended to unearth any potential issues prior to prescription, before the dangers arise. But the disproportionate lack of focus on women’s health issues has historically extended to medical testing.

In the US, from 1977 to 1993, there was a ban on “premenopausal female[s] capable of becoming pregnant” participating in medical trials. This was only overturned when Congress passed the National Institutes of Health (NIH) Revitalisation Act, which required all government funded gender-neutral clinical trials to feature female test subjects. However, it was not until 2014 that the National Institutes of Health decreed that both male and female animals must be used in preclinical studies.

Women’s exclusion from clinical studies has traditionally occurred for a number of reasons. A major problem has been the wrongful assumption that biologically women aren’t all that different from men, except for menstruation. Yet this does not take into account different hormone cycles, and recent studies have revealed that this is demonstrably untrue. In reality, sex is a factor in one’s biological response to both illness and treatment, but this is not as dependent on the menstrual cycle as previously imagined.

Even with evidence of their suffering, women are often ignored. The UK Medicines and Healthcare Regulatory Agency (MHRA) released data for 2012-2017 that shows that 1,049 incidents had occurred as a result of mesh surgery, but said that this did not necessarily provide evidence that any device should be discontinued.

Yes, this may be true. Utilitarian thinking dictates that we look at the overall picture to decide whether the implants do more harm than good. However, when so many people are negatively impacted by the mesh, it prompts the question: Why are alternatives not being looked into more urgently?

The inquiry into the mesh scandal is two years past its deadline, and its chairperson recently stepped down. If this isn’t evidence that the massive medical negligence case is being neglected then what is?

Once again, the biggest maker of the problematic implants is Johnson&Johnson, who have previously been in trouble for their faulty artificial hips and – along with the NHS – are currently being sued by over 800 mesh implant recipients. A leaked email from the company suggested that the company was already aware of the damage that the implants were causing (Johnson&Johnson said the email was taken out of context).

In the case of the mesh implants slicing through vaginas “like a cheese-wire”, whether or not the manufacturers were aware of the dangers posed by their product seems almost irrelevant. Individual doctors have been dealing with complaints of chronic or debilitating pain following mesh insertions for some time. Many of them just have not reported the issues that they have seen to the MHRA’s Yellow Card scheme for identifying flawed medical devices.

Shona Robison, the Scottish Cabinet Secretary for Health and Sport, asked why the mesh recipients had been forced to campaign for their distress to be acknowledged and investigated. I would like to second her question. The mesh problem seems to be symptomatic of a larger issue in medical care – the assumption that women should be able to handle unnecessary amounts of pain without kicking up a fuss. It's time that the medical establishment started listening instead. 

 

Anjuli R. K. Shere is a 2016/17 Wellcome Scholar and science intern at the New Statesman

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