Commentary Magazine posted an article yesterday about the children of New York art dealer Ileana Sonnabend. Mrs. Sonnabend died in 2007.  The children inherited a fabulous collection of modern art valued at $1 billion.

The article reports:

Her children have already paid $471 million in estate taxes on the collection, being forced to sell off most of it to meet the bill.

The story continues:

But there is one item in the collection, a work by Robert Rauschenberg that cannot be sold. It contains a stuffed bald eagle and under the terms of the 1940 Bald and Golden Eagle Protection Act and the 1918 Migratory Bird Act, it is a felony to “possess, sell, purchase, barter, transport, import or export any bald eagle — alive or dead.” The estate, advised by three experts, including one from Christie’s, therefore, valued the work at zero. The IRS decided it was worth $65 million, and is demanding $29.2 million in taxes and $11 million in penalties because the heirs “inaccurately” stated its value.

The question here is very simple–if they cannot legally sell the article, what is its value? The article points out that the value of anything is only what someone is willing to pay for it. In this case, the article cannot be legally sold, so it has no value. However, that didn’t stop the IRS!

The article concludes:

The IRS has an “Art Advisory Panel,” that provides expert advice on the value of art works involved in estates. It was the panel that decided it was worth $65 million. Stephanie Barron, a member of the panel and an art curator at the Los Angeles County Museum of Art, said that, “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.”

It makes perfect sense and Ms. Barron’s statement is a classic example of the fallacy of the just price, that things have inherent value independent of the marketplace. They may have artistic value, emotional value, religious value, etc. But if they cannot be sold then they have no monetary value because they cannot be converted into money.

The IRS Art Advisory Board, I assume, is made up of art experts. It should add an economist to give the other board members a lesson in economics 101 when necessary. And the IRS should have someone empowered to tell the Bureau, “Are you crazy? This will make us look like idiots, and vindictive idiots at that.”

Keep in mind that the IRS is the main government agency involved in implementing Obamacare.