I've talked a lot about Jeff Koons as an artist but what about Jeff Koons, art collector. The artist, whose monumental work, Hanging Heart, brought in $23.4 million at auction last fall, is also an avid collector and his taste might surprise you. The baby-faced artist, who traffics in large works of kitschy pop, puts some of his earnings back into the art market spending big on the traditional masters. The Art Newspaper reports that Koons paid $6.3 million at Sotheby's in New York for a the work shown at right, a large limewood carving of St Catherine, dating from around 1505, by German 16th-century sculptor Tilman Riemenschneider. He is also said to be the lender of an 1866 Gustave Courbet nude to the Metropolitan Museum's current exhibition on the French artist. He bought that painting last June at Sotheby's for around $3.2 million. It's sort of comforting to know that while Koons is benefiting from the booming art market he's also having to pay the same exorbitant prices that everyone else is facing right now.

Is collecting art a luxury or an investment? This simple question has some complex repercussions. The Wall Street Journal reports on the legislation sponsored by two senators, Pete Domenici (R., N.M.) and Charles Schumer (D., N.Y.) to change the tax treatment of sales of art and other collectibles. The capital-gains tax rate of 28% for the sale of art is quite steep compared with only 15% for the sale of real estate and securities (the rate for real estate and securities was also 28% until two measures reduced the rate). The senators argue that the tax rate is unfair to the art industry and punish those who invest and deal in art. Their legislation is endorsed by both Christie's and Sotheby's auction houses and the Art Dealers Association of America.

Another long-standing issue in the art community is the fact that when artists donate their work to museums, libraries and other nonprofit institutions they are only able to deduct the cost of materials rather than the full fair-market-value deduction on their taxes for their gifts. Talk about a disincentive to donate.

Is the problem that the government does not see art as serious business? The WSJ article quotes Joseph Cordes, professor of economics, public policy and public administration at George Washington University who says that the government is interested in encouraging people to invest in business that stimulate job growth and tax revenue and art doesn't really do that. He also says that reducing the capital gains on art sales might discourage certain collectors from donating to museums.

Those opposing changes to the law say that lowering the capital-gains tax rate would just benefit the wealthy without adding anything to the overall economy. The question may come down to the perception of the art world. Is it simply a luxury for the wealthy or is it an industry that impacts people at a variety of income levels? Part of the resistance to these tax bills may be that in supporting them those in Washington could be seen to be creating another way to help the rich get richer.

So far, worries about the fall of the art market have been premature. At least that's the initial takeaway from the auction at Christie's on November 6 which started off the rollicking adventure known as the fall auction season in New York. It was thought that recent economic crises might have weakened the buying power of American art collectors. So far though it seems like the Americans are holding their own. Reuters reports that around half of the sale's buyers were American, one-quarter were European and one-quarter classified as "other." And it was business as usual with a bidding war erupting over Matisse's "L'Odalisque, Harmonie Bleue," which was expected to bring in $15 to $20 million but went for $33.6 million to an unnamed buyer.

The overall news wasn't entirely rosy though, Of 91 lots up for sale, 17 did not find buyers. And the overall sales totaled $394.9 million, which is healthily above the low end of the estimated sales, $348.6 million but still way below the $487.4 million high. Still, there always seems to be a fat wallet open when there is a Picasso around, other hot items included a few from the perennial favorite. "Seated Woman in a Turkish Costume (Jacqueline)," which was estimated to bring around $25 million went for $27.5 million. "Head of a Woman (Dora Maar)," brought in $16.2 million, which was far above the $8.5 million high estimate.

Of course, this is just the beginning of the sales. As I mentioned earlier in the week, the signs of any potential weakening in the art market will most likely be seen in the Contemporary sales next week. Which brings me to a related story in the London Times about the "secrets" of top art collectors and the changing role of the collector in society. The article asserts that today's collector is a more public figure, whose acquisitions are often known and whose pieces often become their calling cards, loaned off to museums around the world.

In a new book, Great Collectors of Our Time, James Stourton, the chairman of Sotheby's UK analyzes art collecting in the postwar era. While it still takes bucketloads of money, today's collector must combine his back account with a knowledge of the market, a bit of intuition and a single-minded passion that can stem from a variety of personal reasons. A collection, even one amassed for investment purposes, remains profoundly personal. The great collectors collect with their heart first and their wallet second. Which is the reason that anyone, even with a limited budget, can be a collector, just not at the fall sales in New York.

UPDATE: Uh oh, the news isn't so good from the Impressionist and modern art auction at Sotheby's in New York which Bloomberg calls "disappointing." Even paintings by some of the names that usually get snapped up in a moment like Picasso and Van Gogh didn't sell. Vincent van Gogh's yellow-and-blue `The Fields (Wheat Fields)'' which depicts the place where he later killed himself was estimated to sell for $35 million and received no bids. Paul Gauguin's Tahitian ``Te Poipoi (The Morning).'' had a high estimate of $60 million but sold for $39.2 million in a a lone telephone bid by Hong Kong billionaire Joseph Lau. The total sale was $269.7 million under the presale low estimate of $355.6 million. Did yesterday's Wall Street nose dive but a damper on the proceedings? It certainly looks like it didn't help.

[Thanks, Lana]

This week delivers another set of economic indicators in the form of the prices earned in the big sales at Sotheby's and Christie's in New York. The next few weeks bring us the sales in Impressionist, modern, postwar and contemporary art at the competing houses. Many will be watching these auctions as an indicator to see if the art market, which has been booming over the last couple years, is headed for a fall. These are the first big art sales since the sales that take place in May each year. Traditionally the May sales are larger. The Financial Times mentions that collectors could spend up to $2 billion in the sales, an amount almost three times above the level reached just two years ago.

The art market tends not to fall all at once. Generally it's the new kids, the contemporary art, which loses value first. This art is often beloved by younger collectors, the Wall Street guys looking for something trendy and hot. Jeff Koons, whose heart is shown at right and Damien Hirst are two who have commanded huge prices recently (Hirst is currently the world's most expensive living artist). The Impressionist and modern artists, the Monets and Picassos of the world won't be plummeting in value any time soon.

The prices for modern art have been booming lately and one of the top names that always comes up is Andy Warhol but a new lawsuit highlights a potential risk for Warhol collectors. Joe Simon-Whelan, a filmmaker, is part of a class action lawsuit that alleges the Andy Warhol's estate, art foundation and authentication board have conspired to manipulate the art market to keep the price of Warhols in their own collection high.

Joe Simon-Whelan is the owner of a Warhol self-portrait from 1964. He bought the silk-screen on canvas in 1989 for $195,000 and it has a not on one side from Fred Hughes, the late executor of the Warhol estate,certifying it as an original. When Simon-Whelan brought it to the board for authentication, the board denied it not once but twice even though he also brought letters of substantiation from other art professionals. They even stamped it with a red ink stamp that bled through the canvase. Simon-Whelan was hoping to sell the work for $2 million. Simon-Whelan says he believes that the board is trying to create a monopoly in the market by denying artworks that are not in the foundation's own collection. The lawsuit is seeking $20 million in damages.

The suit comes at a time when Warhols are achieving record prices, .Green Car Crash recently sold for $72 million and the Lemon Marilyn, shown at right, went for $28m on the same day.

Part of the problem is that no one knows precisely how many artworks were produced by Andy Warhol and his Factory. Warhol was famous for seeing art as commerce and devoted himself and his large team of apprentices to churning out a large quantity of art. The fact that Warhol used silk screens and generally focused on known people and objects makes him an easy mark for art fakery and as prices for Warhols rise and rise, there are more people eager to own a Warhol.

This month's Artnews focused on the increasing market for drawings. What was once just an entry point for younger or less wealthy collectors has become something much larger. This point is well-illustrated by the prices for drawings in the latest Old Master Drawings auction to be held on Tuesday at Christie's New York. The drawing shown here a male torso that is one of the Michelangelo drawings in private ownership may bring in well over $3 million. Drawings by Rembrandt, Rubens and Watteau are also up for bid.