Monday, March 2, 1998 | 10 a.m.
Seven months ago, Mirage Resorts Chairman Steve Wynn lobbied legislators to give art buyers a sales-tax break. Now Wynn appears set to take advantage of the law he helped create.
If Wynn uses money from a recent stock sale to buy expensive art for the Bellagio hotel-casino under construction on the Strip, he'll earn millions in tax savings.
Wynn would be the first to apply for the break under the 1997 law giving high-end art buyers a 71.4 percent sales-tax reduction, said Dino Dicianno, deputy executive of the Nevada Department of Taxation.
Indications are strong that Wynn plans to buy art and reap a benefit from the new law.
This month, Wynn sold 3 million shares of company stock, raising about $74 million. The sales-tax break on a purchase that large would allow Wynn to pocket $3.7 million.
Jason Ader, an analyst with Bear, Stearns & Co., said Mirage executives are telling Wall Street traders that Wynn will use the money from the stock sale to buy art for the Bellagio.
"This has become a real exciting passion for him," Ader said.
Mirage spokesman Alan Feldman would not confirm that Wynn plans to add to his art collection, saying only that Wynn sold the stock "for personal reasons."
If Wynn goes through with the art buy, the tax-relief law is in place.
A bill approved at the 1997 Legislature gives a 71.4 percent sales-tax break on purchases of artwork valued at $25,000 or more. The law requires the work to be displayed publicly at least 20 hours per week for a minimum 35 weeks per year.
Normally, the sales-tax rate in Clark County is 7 percent. But under the new law, expensive art is taxed at 2 percent.
Feldman said the tax break received widespread support from the arts community.
Arts advocates supported the legislation because a provision in the bill requires the work to be displayed in libraries, universities or other public buildings, such as casinos, to be eligible for the tax break.
"The Legislature supported it ... for the purpose of putting art on display," Feldman said.
State Sen. Ernie Adler, D-Carson City, said Department of Taxation representatives testified that many wealthy art buyers were paying for expensive art in states such as California and New York and weren't reporting that fact when the piece was transported to Nevada.
As soon as the art crossed into this state, Adler said, a 7 percent tax rate was supposed to have gone into effect, but buyers weren't stepping forward and volunteering to pay. They were keeping their buys relatively quiet and displaying work only in private settings, such as homes.
"There was no way to audit that," Adler said.
Adler said the auditing process will be easier now because art buyers who want to display work in public have to report their purchases to be eligible for relief.
Under the new law, Wynn could reap the sales-tax break himself, or he could lease the art work to the Bellagio. The lease arrangement would allow Wynn's casino company to receive the 5 percent break, while Wynn would receive a lease payment from the company.
Although Wynn's current plans aren't certain, the tax-relief bill had a controversial history that makes his anticipated art buy topical.
When the bill died in the Assembly during the summer on a 15-27 vote, it was revived three days later after intense lobbying, and passed 30-12.
From there, the bill moved to the Senate, where, according to news accounts, it appeared headed for death in committee until Wynn phoned key legislators.
At least one casino lobbyist, noting that Wynn would benefit from the legislation, joked that the unofficial title of the bill was "Show Me the Monet."
Some lawmakers who opposed the tax-break bill said it gives relief to the wealthy.
"I thought it gave tax breaks to those who could afford serious art, not the kind of stuff I could put in my house," Sen. Mike McGinness, R-Fallon, said last week. "If they could afford the art, they could afford the tax."
McGinness, chairman of the Senate Taxation Committee, received a call from Wynn but voted against the bill anyway. The bill passed the Senate 13-8 and was signed into law by Gov. Bob Miller. It became effective July 1.
Another who opposed the bill was Sen. Bob Coffin, D-Las Vegas.
"I thought it would smell like a favor for the most powerful man in Nevada," Coffin said. "It looked bad at a time when we were being asked to pass a sales tax for more water."
Feldman noted that Wynn -- or his company, depending on whether the buy was personal or corporate -- won't receive a tax break on art purchased before July 1.
Mirage Resorts has spent $180 million on paintings by such masters as Picasso, Monet and Degas, according to Ader.
Among Mirage Resorts' inventory is "Famille Tahitienne," a $35.5 million painting by Paul Gauguin.
Last week, State Sen. Joe Neal, D-North Las Vegas, complained that the law hurts school districts. In Clark County, 2.25 percent of sales tax revenue is earmarked for the local school support fund. Under the new law, high-end art buyers won't pay that portion.
"This money was going to our school children," Neal, a candidate for governor, said. "This shows you the arrogance of the gaming industry when they can do that."
Feldman said Neal is grandstanding.
"He's an underdog candidate for governor," Feldman said. "He's going to make as much noise as he can to generate headlines."
archive
