Many artists take part in a Pago en Especie(Payment in Kind) program—the only one of its type in the world—that allows artists to pay federal income taxes with their own artwork.
In 1957, David Alfaro Siqueiros made a proposal to keep a fellow artist out of jail for tax evasion: Let him pay his debt in art.The program was hatched in 1957, in the throes of the so-called “Mexican Miracle,” a period of 40 years that saw sustained annual economic growth of between 3 and 4 percent. As legend has it, muralist David Alfaro Siqueiros, one of the most influential artists of his generation, approached the secretariat of finance in 1957 with a proposal to keep a friend and fellow artist out of jail for tax evasion: Let him pay his debt in art. The agreement laid the foundation for Pago en Especie, which today is a public collection of nearly 7,000 paintings, sculptures, and graphics accepted as tax payments from some of Mexico’s best-known artists.
The program is simple—donations are made according to reported sales. If an artist sells between one and five pieces of art in a given year, he or she donates one piece to the federal government. If the artist sells between six and eight pieces, he or she donates two, and so on, with an annual cap of six donations. Only painters, sculptors, and graphic artists can participate, though program administrators are currently considering whether to include performance art as an acceptable means of payment. A committee of artists and curators oversees the donations process to ensure that the art received meets certain quality standards. If the art is of a particularly high caliber, it becomes part of the “national-heritage collection,” which is displayed in a permanent exhibit in Mexico City. All other pieces are divided up and shipped across the country to fill public museums and administrative buildings. Certain pieces are also sent abroad as part of exhibitions coordinated with museums across the world. Last year alone, the program sent Pago en Especie pieces to 13 international galleries.
“You might think we would be tempted to scribble something on a napkin to pay our taxes,” said Miguel Calderón, 38, a Mexico City native whose paintings were featured in Wes Anderson’s 2001 film The Royal Tenenbaums. “But aside from being convenient, it is also a source of pride, knowing that your art will become part of a historic collection that reflects Mexico’s creative heritage.”
Mexico is one of several countries seeking to support the arts through tax incentives, which range from direct subsidies to tax credits for donations to organizations dedicated to the arts (as is the case in the United States). Last year, the United Kingdom implemented a Cultural Gifts Scheme that allows individuals and corporations to donate artwork—defined as “any picture, print, book, manuscript, work of art, scientific object, or other thing which … is pre-eminent for its national, scientific, historic or artistic interest”—in exchange for a reduction in income tax and capital-gains liability. In 2012-13, tax reductions through the program totaled more than $536,000.
“You might think we would be tempted to scribble something on a napkin to pay our taxes. But aside from being convenient, the program is also a source of pride."According to John O’Hagan, an economics professor at Trinity College in Dublin, “one of the arguments used most frequently in relation to tax subsidies to the arts relates to national identity.” And in Mexico, the arts have long been associated with national identity. “Murals were how Mexican history was first portrayed to the public,” said José Ramón San Cristóbal Larrea, director of the government’s Cultural Promotion and National Heritage Office. “A country’s culture and its understanding of itself evolve through its art. And that’s something we are in need of, especially now.”