The main threat used to pressure some universities is the threat of cutting funds. A financial sanction is applied to force these institutions to fold. The famous institution, Harvard, has been targeted by the government for said words. Another way to pressure these private establishments is to revoke their tax-exempt status.
Let’s take a look on the letter sent to Harvard from the Trump administration on April 11th.To make it shorter, the new government would like to reform some of the university’s policies. For example, they would like to change policies on hiring, accepting foreign student,ect. Also, it might be a question of opinion on different issues that Harvard doesn’t agree with the Trump administration.
This announcement from Trump’s administration is based on Harvard’s refusal to change some of its core policies. Other important colleges will also be targeted if they don’t apply the changes that the administration orders.
“It would be historically unprecedented,” Brian Galle, professor of tax policy at Georgetown University, told CBS MoneyWatch. “Certainly no major research university has ever lost its tax exemption.”
According to the IRS, some organizations that serve a public purpose, such as churches, charities, national parks, and many more, are eligible for a tax exemption. However, Mr.Trump cannot force the IRS to remove Harvard’s tax conditions. It would be a violation of the law.
The public opinion is that the action would be a threat to free speech. On the other hand, some think that federal funding is not an entitlement and that Harvard has no right to take advantage of American taxpayers.
“The gravy train of federal assistance to institutions like Harvard, which enriches their grossly overpaid bureaucrats with tax dollars from struggling American families, is coming to an end. Taxpayer funds are a privilege, and Harvard fails to meet the basic conditions required to access that privilege,” White House spokesperson Harrison Fields wrote in a statement to The Crimson.
Another issue is that advancements in medicine, vaccines, engineering, and many other fields would be temporarily stopped. In other words, the USA benefits massively from research in these different fields. This means that if they are brought to an end, there will be economic impacts and stagnation in development. There is a reason why the federal government recognizes these institutions’ essential missions.
If Harvard were to lose its tax exemption, there would be many consequences for the university’s finances. For example, investors receive tax benefits if they donate to Harvard, such as reduced income tax. If the renowned university were to lose its status, investors could back off. Consequently, Harvard could lose billions in endowment, donations, and federal funds.
Harvard’s legal case is strong, as judges don’t want to create a precedent in this instance. The famous school also affirms that Trump’s administration has violated the First Amendment of the Constitution.
“I think Harvard will win all of them,” said Geoffrey R. Stone, former dean of the University of Chicago Law School, who studies constitutional law, including the First Amendment.
