Trump floats idea of stripping Harvard’s tax-exempt status

• President Donald Trump suggested revoking Harvard University’s tax-exempt status after the school rejected federal provisions tied to funding. He accused the university of promoting political and ideological agendas, which he claims violate requirements for tax exemption.
• While Trump can’t directly revoke the status, he can prompt a review by the IRS.
• Former Harvard President Lawrence Summers condemned the move to the New York Times as authoritarian.

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President Donald Trump is floating the idea of revoking Harvard University’s tax-exempt status.

Ivy League university distances itself from federal provisions

Trump’s suggestion comes one day after the Ivy League college formally denied agreeing to the Trump administration’s provisions to keep billions of dollars in federal funding in place.

“Perhaps Harvard should lose its tax exempt status and be taxed as a political entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘sickness?’ Remember, tax exempt status is totally contingent on acting in the public interest!” the president wrote on his Truth Social media account.

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If Trump follows through on his threat, Bloomberg Business estimates the university will owe $465 million in property taxes alone.

Understanding tax-exempt status for universities

The government grants most U.S. universities tax-exempt status, meaning they don’t pay federal income taxes because they serve a public good, such as education.

In order for a higher education institution to keep its tax-exempt status, it can only operate for educational purposes, avoid political campaigning and comply with federal laws.

The IRS has the authority to revoke a university’s tax-exempt status if it determines the institution is not operating in accordance with its tax-exempt purpose.

A notable case from 1983 is Bob Jones University v. United States, in which the U.S. Supreme Court upheld the IRS’s decision to revoke the university’s tax-exempt status due to its racially discriminatory policies, ruling that such practices were contrary to public policy.

The president doesn’t have the direct authority to revoke Harvard’s tax-exempt status. However, he can instruct the Treasury Department, which oversees the IRS, to review it.

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Response from former Harvard president

Lawrence Summers, the former Treasury secretary and former president of Harvard, responded to Trump’s suggestion, giving a statement to The New York Times saying:

“Selective persecution of your political adversaries through the tax system is the stuff of dictatorship. This is unconscionable and wrong but a continuation of trends we have seen in President Trump’s approach both to universities and to tax enforcement.”

Harvard has not responded to Trump’s new threats.