Trump threatens tax-emption for schools and universities

Harvard University is planning to teach classes largely online in the 2020 fall semester: AP
Harvard University is planning to teach classes largely online in the 2020 fall semester: AP

Donald Trump escalated his feud with school systems and colleges that started over whether they should reopen this fall amid the coronavirus pandemic, threatening their tax-exempt status.

The president accused "too many" colleges and school systems of "radical left indoctrination" of students, verbiage ripped from his 2020 re-election campaign.

"Too many Universities and School Systems are about Radical Left Indoctrination, not Education. Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status..." the president tweeted from Air Force One en route to Florida. "... and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues. Our children must be Educated, not Indoctrinated!"

Why do public and private institutions of learning get tax-exempt status?

According to the Association of American Universities, a "vast majority of private and public universities and colleges are tax-exempt entities as defined by Internal Revenue Code (IRC) Section 501(c)(3) because of their educational purposes – purposes that the Federal government has long recognised as fundamental to fostering the productive and civic capacities of citizens – and/or the fact that they are State governmental entities. In turn, States generally grant tax- exempt status to organisations, including universities and colleges, which qualify as tax-exempt entities under Federal law."

The president has long criticised schools, especially those of higher learning, of teaching what he sees as left-wing curriculum.

As a candidate in 2016, Mr Trump proposed reforms to the tax-exempt process. But he appeared to go even further on Friday.

"I'm going to work with Congress on reforms to make sure that if universities want access to all of these special federal tax breaks and tax dollars, paid for by you, that they are going to make good-faith efforts to reduce the cost of college and student debt and to spend their endowments on their students, rather than other things that don't matter," he said in a speech in September 2016 in Chester Township, Pennsylvania.

"These universities use the money to pay their administrators, or put donors' names on buildings, or just store the money, keep it and invest it. In fact, many universities spend more on private equity fund managers than on tuition programmes," he added then. "But they should be using the money on students for tuition, for student life and for student housing."

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