Why don't you give a Picasso to the Metropolitan Museum of Art? The answer to that is probably simple: You don't own a Picasso. But what if you did? Would you give it to the Met? Sen. Daniel Patrick Moynihan (D-N.Y.) is concerned that an obscure provision in the 1986 tax reform act is destroying the generous impulses of today's wealthy art collectors. Instead of donating their Picassos, they are selling these prizes to even wealthier collectors, some of them Japanese. America's heritage of European paintings is being shipped abroad!

Moynihan is leading the charge of bien pensants who are campaigning to get this matter corrected. The Senate version of the 1990 budget package contains Moynihan's proposed amendment. House Ways and Means Chairman Dan Rostenkowski (D-Ill.) is vigorously opposed. What will happen to the Moynihan amendment is unclear as I write. But The New York Times editorial page has dangled the adjective "thoughtful" before "members of Congress {who} support it through conference to enactment," a rhetorical bribe that even the most Philistine politician may find hard to resist.

At the risk of appearing unthoughtful, let's think this thing through. The idea of the charitable income tax deduction is that you should not have to pay taxes on money that you give away. If you earn $100,000 and donate $10,000 to charity, you declare $100,000 of income, take a $10,000 deduction (that is, if you itemize), and pay taxes on $90,000. Fair enough. But suppose you give away a $10,000 painting instead. And suppose you bought the painting for $500. By giving it away rather than selling it, you avoid having to declare your $9,500 profit as income. But you still get to deduct the $10,000. In effect, you get to use the deduction against other income that you didn't give away. The same device works with shares of stock or any other kind of so-called "appreciated property." By giving it away, you avoid the tax on the profit but still get the deduction for the full amount.

Tax reform didn't even close this absurd loophole. All it did was provide that the excess deduction (the $9,500 in my example) should be subject to something known as the "alternative minimum tax." The AMT kicks in when you have a high income but a lot of deductions. You have to refigure your income without certain deductions and pay the flat-rate AMT instead of the normal income tax you would otherwise owe. Right now the AMT is 21 percent (Rostenkowski proposes to raise it to 25 percent), compared to the normal top-bracket rate of 28 percent. Basically, you pay either 28 percent on your income after deductions (the basic income tax) or 21 percent on your income before certain deductions (the alternative minimum tax), whichever is greater.

If, as the American Association of Museums and suchlike groups insist, contributions of art to museums have plummeted because of the 1986 tax reform, this reveals how few rich people pay even 21 percent of their income in federal income taxes. That's because the alternative minimum tax only affects people who have so many deductions that they aren't even paying 21 percent. This puts the debate about the merits of 28 percent versus 33 percent in some kind of perspective.

If the generosity of art donors is drying up because of a mild limit on their right to take what is in essence a double deduction, this puts that generosity into perspective as well. Those little plaques next to the pictures ought to read, "Gift of Mrs. and Mrs. Norman Jones, with the help of a large bribe from Uncle Sam."

Moynihan wanted to reverse the 1986 reform concerning all contributions of appreciated property. But he has settled for changing the rules on tangible property only. This would restore the tax break for gifts of paintings to art museums, but not for gifts of stock to universities and so on. Proponents emphasize that it wouldn't cost very much: perhaps $100 million over five years. Peanuts. But of course that's true of many tax loopholes, existing and proposed. And they add up. The philosophy of tax reform was to eliminate the loopholes and lower the rates. The Times now proposes to raise the rates ever-so-slightly to make up for reintroducing this loophole.

Like most tax subsidies, this one couldn't survive the kind of scrutiny a direct government expenditure gets, even though its effect on the deficit is identical. It was an oversight when the deduction for charitable contributions first appeared, and it only gained impassioned supporters after it was discovered and exploited. It makes little sense. Why should the government subsidize the gift of one $10,000 painting more than another based on the accident of how long the donor has owned it?

These good-government-type arguments against special-interest tax loopholes are familiar to the sort of people who frequent art museums, enjoy the fulminations of Sen. Moynihan and write editorials for The New York Times. If the special pleaders were loggers arguing for jobs or defense contractors arguing for national security, they could expect a stern talking-to from the bien pensants. But Art humbles us all.