Equitable Resale Royalties

A “resale royalty right” is a legal right that gives certain artists the right to claim a percentage of the resale price of the artworks they created. Many countries have created a resale royalty right, but the United States has not, and a federal court recently held that a resale royalty right created by California was preempted by federal law. Commentators disagree about the justification of the resale royalty right. Supporters argue that equity entitles artists to a resale royalty right, which also encourages the production of artwork and protects artists from exploitation. Opponents argue that the resale royalty right is both inequitable and inefficient, because it benefits successful artists at the expense of unsuccessful artists by lowering prices on the primary market, and cannot provide a salient incentive for economically rational artists to produce more artwork. This Article assumes that the purpose of the resale royalty right is to increase the equity and efficiency of the art market, and asks how to create an equitable and efficient resale royalty system. It considers several different potential models for the collection and distribution of resale royalties, including a private right of action, resale royalty organizations, and federal taxation. It concludes that the most equitable and efficient model would be a “resale royalty tax,” distributed either to the National Endowment for the Arts (NEA) or on a progressive basis to unsuccessful artists