Art Market

Collector Who Refused to Build Trump’s Wall Speaks Out against Administration’s Effect on Culture

Molly Gottschalk
Feb 16, 2017 11:05PM

Portrait of Jorge M. Pérez by Gesi Schilling for Artsy.

Just days after the U.S. inauguration, President Donald Trump sent an email to Miami art collector, real estate tycoon, and patron of the arts Jorge M. Pérez. Sent from The Trump Organization, the email asked for Pérez’s help building the border wall with Mexico that had been a hallmark of Trump’s campaign.It included sketches for the wall as well a handwritten note from Trump himself (Pérez spotted his friend’s penmanship).

The President asked Pérez to call him to discuss the proposal. But while the pair have been friends and business partners for some two decades and have collaborated on a number of endeavors—including Trump-branded condos in Southern Florida—Pérez didn’t skip a beat in saying no.

He had moral, practical, and cultural objections. “I wrote him back an email saying this is not the right thing to do,” Pérez said during last week’s ZsONA MACO fair in Mexico City. “One, I think it’s immoral, it’s wrong; two, it’s not going to work; and three, which is a funny one, I said you have to remember my name is Pérez, right? Which side of the wall do I get put onto?”

Pérez was born in Argentina to Cuban parents living in exile. The CEO of The Related Group is currently the 28th richest immigrant on the Forbes 400 list. But long before his luxury highrises transformed Miami’s skyline or he became the namesake of Miami’s Pérez Art Museum Miami (PAMM) through a $40 million gift, Pérez came to America for school in 1968.

It’s little surprise, then, that Pérez would oppose Trump’s wall and the proposed border tax to pay for it. Primary to his opposition were the negative impacts Pérez projects both would have on poverty levels, employment, and the growth of the middle class in Mexico. But the collector says the wall would also harm the arts.

While many options are still being considered to finance construction, the proposed “border adjustment tax” would see a 20 percent tax on imports from Mexico. The current rhetoric argues that this is how Mexico would pay for the border wall. However, economists and businesspeople have argued that, in fact, the tax would increase prices for American consumers and decrease profits for American companies.

When these effects are applied to the art world, Pérez says the tax would negatively impact the international exposure for artists based in Mexico. “Mexican art, and Latin American art in general, is undervalued because it hasn’t had significant international reception yet,” he says. An import tax would stunt artists’ growth into the U.S. market, according to the collector, because it could make Mexican products, including art, less affordable in the U.S.

The proposed tax would likely mean that a U.S. gallery selling work by a Mexican artist would be required to pay “far more taxes than it has been paying under the current law,” says Gary Clyde Hufbauer, Reginald Jones Senior Fellow at Peterson Institute of International Economics. According to Hufbauer, a U.S. gallery would not be able to deduct the cost of an artwork supplied by a Mexican artist or gallery. “If [the artist] is not willing to cut his prices, then the price to the U.S. firm will go up by 20 percent.”

For this reason, the tax could significantly disincentivize U.S. galleries that sell primarily to U.S. collectors to work with Mexican artists. While tariffs on consumer goods are often passed on to the consumer, galleries have less flexibility to suddenly raise artists’ prices, particularly during the current, more conservative market, and thus often bear the brunt of tax increases in the short term.

German dealers, for example, spoke out against an EU-imposed increase on the value-added tax (VAT) the country charges on artwork from 7% to 19%. They said the policy change meant either having to charge prices higher than their artists’ other galleries abroad and thus lose business or maintain prices and take a hit to their portion of the sale.

“Anything that is restrictive will have an impact on sales,” says Pérez, recalling the hoops collectors often have to jump through to buy art at competitive prices in Brazil, due to the country’s high ICMS Tax and other significant protectionist measures. Galleries at the art fair SP-Arte traditionally benefit from an exemption from the tax during its run, but artists often travel to Brazil and make works for shows in the country to avoid the additional border tax.

Appropriations for the border wall and any scheme to make Mexico “pay” still need to go before Congress, and policy may change in the process. But, while culture has historically had a special place within trade agreements out of recognition that it doesn’t function like other goods, Hufbauer says “the proponents of this approach have said there will be no exemptions” to the tax.

To soften the blow of the proposed tax, Hufbauer says the idea of implementing it over a period of four or five years has been floated. This could limit some adverse effects of the measures by making price increases—or decreases in profit—more gradual. But, regardless, Mexican galleries selling to the U.S. and Mexican artists would be left at a comparative disadvantage, Pérez suggests.

The collector notes that the border wall is but one example of the policies by the Trump administration that could negatively impact art and culture, highlighting the proposed Heritage Foundation budget that would eliminate funding for both the National Endowment of the Arts and the National Endowment for the Humanities.

“All of us need to oppose anything that can go against the arts,” said Pérez. He believes Trump “is going to take a very aggressive attitude” toward the arts in terms of government spending because “art funding for them is unimportant.”

Pérez makes a business case for why this is the wrong strategy for a President who campaigned on job creation and reaffirming the American economy’s dominance. “[Creativity] is such an important part in everything that we do,” he says. “In our business if we aren’t creative, we couldn’t [make] buildings that serve the population well.”

Instilling the value of creativity is not a luxury but in fact essential, and needs to be taken seriously at the earliest stages of education, according to Pérez. “Food is for the stomach, jobs are for the stomach, and art is for the soul.”

Molly Gottschalk