Made a new account because I work in the industry. Aspects of this meme are true but generally it's not this blatant. The blue-chip art market is pretty financialized, and scams between dealers and buyers definitely exist that auction houses are all too happy to facilitate, but it's a bit more complex than this. I also take exception to the punchline that abstract or non-figurative art is a result of grift, because that's just hugely incorrect, but maybe I'll save that for another post.

High level collectors will donate works to museums and institutions and they will usually get a tax write off for that, but generally you have to have had the work in your possession for a few years before it counts, so guys buy things and store them for a few years. Museums and institutions actually generally don't want donations, since they already have their own problems with inventory and generally can't afford the riders that a lot of these donations come with ("I'll give you my collection of 10 paintings if you agree to have them on permanent display with my name on it") so quite often they'll tell you to fuck off. If you buy a work with the aim of a tax write off, generally you've already worked out a deal with the institution and it's probably something of existing historical import that they'll want.

A bigger issue with the contemporary art market is the relationship between dealers, their artists, collectors and auction houses. If you buy the hot new artist from one of the huge galleries - Zwirner, Gagosian - or the next tier or two down, you'll likely sign an agreement to not offer any work at auction for X years, or that you'll buy one and buy another to donate, mostly with the aim of inflated desirability and limiting supply. Often those agreements are informal by design, so new works enter the market come with maximum hype. "Wet" paintings entering at auction is a term you'll hear for any new painting that was recently finished, bought, and reoffered. There's a huge issue with middling new painting ("zombie formalism" and now "zombie figuration") flooding the market and getting outrageous prices on the back of speculation and flipping, but part of this at least can be explained with dumb new money - tech bros, oligarchs, etc. - and bad art advisors.

The most inaccurate thing about the above is an inflated valuation by an appraiser. Appraisal values are based on sales records, and since those are basically public so most of the grift comes from trying to juice the sales market directly.

Anyways. As I was typing this @solaranus also covered some of it, so I'll leave it there. The important thing is that artists usually get the short end of this stick and won't see anything after the initial sale. We're seeing a shift in the secondary market with artists' resale rights being built into contracts or buyers premiums, so that for each resale the artist will get a small percentage cut - but at the moment it's just huge artists like Richter who can get away with adding that, or smaller auction houses, so there's still a ways to go.