Let's say you are among the ultra-rich, the problem with being this rich is that you have to pay a lot of tax to the government, more specifically, 42.7% of your income, and obviously you’d prefer not to do that. So what do you do? Where can you protect your money? Stocks, real estate, and commodities all can be electronically tracked, and can therefore be taxed by the government. One of the best options you have is to put your money into "fine arts”.
First, you need to buy art that has a high value from an auction house. It doesn't matter how the art looks because these auction houses have a lot of influence in the fine arts market that whatever price is set by them becomes the value of the art. Even if it's just a canvas with red colour on it, which recently sold for $1.1 million dollars.
Now, you cant store the art in your house because then you’ll have to pay a sales tax. Instead, you can buy the art and get it delivered to a free port. Freeports are a special kind of port where normal tax and customs rules do not apply. After it is safely stored in this freeport, you can either wait for the art to grow in value slowly or you can artificially pump up the price of your art by making your friends bid on it or use the influence of auction houses to increase its value.
Let's say you bought a painting for $20 million and after a few years, the value of the painting goes up to $50 million. And in the same year, you made $100 million in income. So now you have to pay roughly $40 million in tax. Instead of paying that much in tax, you can simply donate the painting, which is now valued at $50 million, to a museum. Since you donated the painting as a form of 'charity', you are allowed to deduct its upraised value from your taxable income as long as it is less than 30% of your income. So now instead of paying 42.7% tax on your $100 million, you have to pay tax only for $70 million. Which is much less relatively. But since the value of your painting is $50 million and you only deducted $30 million from it. You can still use the other $20 million and split it over 5 years to deduct tax.
If you're not interested in deducting your tax, you can always take it to an auction house and pump up the prices there and sell it. After selling the art you wouldn’t have to pay ordinary taxes but instead, pay a long-term capital gains tax which is way lesser. For some people, art is something they are truly passionate about, and for some, it's simply a method to avoid taxes.
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