President Trump threatened Harvard’s tax-free status on Tuesday as schools rejected the administration’s demand for a range of policy changes, a huge escalation of the president’s dispute with the nation’s wealthiest and oldest universities.
The threat comes as the Trump administration stopped more than $2 billion in federal funding for Harvard University as the university rejected changes in its recruitment and admission practices and courses. Mr. Trump decided to step up the pressure exercise after watching Harvard resistance news on Monday night, a person familiar with the matter said.
Trump posted Truth on Tuesday morning on “Social Truth” “Maybe Harvard should lose its tax exempt status and tax it as a political entity.” “Remember, tax exempt status depends entirely on acting in the public interest!”
White House officials said Tuesday that the IRS will make independent decisions on Harvard’s tax-free status, but the president made it privately that he had no intention of retreating from the battle with the university.
Losing tax-free status can cost Harvard billions over time.
It is the latest turn of the battle between Mr. Trump and the academic community, and the Trump administration has been threatening to withhold billions of dollars in federal funds from various colleges and universities, a way to “awaken” ideology from American college campuses. Trump officials suggest that schools like Harvard are hotbeds of anti-Semitism, elitism and suppression of freedom of speech.
Federal law prohibits the president from telling the IRS to conduct a specific tax investigation “directly or indirectly”, and it is not clear whether the agency will actually conduct an investigation. An IRS spokeswoman declined to comment.
“Selective persecution of political opponents through tax systems is dictatorship,” said Lawrence Summers, former Treasury Secretary and former Harvard President. “It’s unreasonable and wrong, but the continuation of the trend we see in President Trump’s attitude towards colleges and tax enforcement.”
Harvard officials did not respond to requests for comment.
Organizations must apply for tax exemption. The IRS will conduct an audit and in some cases revoke the organization’s tax-exempt status if the IRS finds that the group is engaged in too much political or commercial activities. IRS officials said entities can appeal the decision in court or reach a settlement to maintain their status.
John Koskinen, a former IRS specialist, said that given its series of research and teaching functions, it is impossible for the IRS to successfully revoke Harvard’s tax-free status. Nevertheless, having to file a lawsuit in court could be a form of intimidation against Harvard.
“The opportunity to get the IRS to actually revoke a 501(c)(3) status at a large university is hardly there,” Koskinen said. “The problem is that you want people to spend a lot of time and money to respond and defend their actions.”
Harvard doesn’t have to pay taxes in most cases due to its exempt status, although Mr. Trump’s 2017 tax bill taxes on large college donations that Republicans now want to increase significantly.
In addition, donations to the research university are deductible. This helps donate from super healthy donors who want to choose how to spend their income rather than giving the money to the federal government. Some prominent Republican donors, such as billionaires John Paulson and Ken Griffin, have donated hundreds of millions of dollars to Harvard University.
Tax-free organizations have long been the IRS political minefield during the Obama administration, with Republican lawmakers accusing the agency of unfairly targeting conservative political groups seeking tax-free status, although a gatekeeper later concluded that the agency was not scrutinizing conservative and liberal organizations.
“Economists have extensively studied and documented that tax charitable contributions have a great impact on university support,” Mr. Summers said. “Removing Harvard’s 501(c)(3) status will not happen because we are a legal state, and if it does, it will undermine advances in medical and scientific research, maintaining American and Western values, opportunities for the next generation of Americans, and important magnets for America in the world.”
The Trump administration has repeatedly tried to turn the IRS into a political tool, subverting the long-term protection of sensitive taxpayers’ information by pushing the IRS to help immigrants and customs enforcement to expel undocumented immigrants.
Government officials also drastically reduced the IRS’s workforce and moved to Billy Long, a former Republican congressman with little background, in addition to promoting fraudulent tax credits to lead historically unpolitical institutions. The nonprofit and liberal cause that aligns with Democrats is providing the IRS with a review of its tax-free status under the Trump administration.
Last week, Trump officials sent a letter to Harvard University asking the university to conduct regular progress reports on how universities are built in order to continue to “maintain” financial relations with the government. Harvard rejected the demand.
“No matter which political party is in power, no government should decide what private universities can teach, who they can acknowledge and hire, and what areas of study they can pursue,” Harvard President Alan Garber said in a statement to the university on Monday.
The Trump administration’s response was to freeze by establishing more than $2 billion in funding, although the details of the funding are unclear. Harvard University has received about $9 billion in federal funding, with $7 billion of which will be obtained at 11 affiliated hospitals at Cambridge University in Boston and Massachusetts, including Boston Children’s Hospital and the Dana-Farber Cancer Institute. The remaining $2 billion will go directly to Harvard’s research grants, including for space exploration, diabetes, cancer, Alzheimer’s disease and tuberculosis.
Harvard is uniquely positioned to bear financial losses and donate more than $50 billion. Columbia University, by contrast, has a much smaller donation, settling with the Trump administration when it was forced to change its policies and plans.
White House Press Secretary Karoline Leavitt postpones questions about Harvard’s tax-free status to the IRS
“The presidents are asking: Don’t violate federal law, and then you can get federal funds,” Ms Levitt told reporters on Tuesday. “I think the president is begging for a good question, too. When they have an endowment of over $50 billion, Harvard’s door is over $2 billion: Why would American taxpayers subsidize a multibillion-dollar university in a bank? We certainly shouldn’t fund places where there is such a serious anti-Semitism.”
Anemona Hartocollis Contribution report.
