The Internal Revenue Service (IRS) is reportedly planning to revoke Harvard’s tax-exempt status in what would be a probably illegal move amid Donald Trump’s concerted attack on the independence of US institutions of higher education.
Trump on Tuesday called for Harvard, the US’s oldest and wealthiest university and one of the most prestigious in the world, to lose its tax-exempt status, CNN first reported.
“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 US president said in a post on his Truth Social platform.
The Trump administration asked the top attorney at the IRS, the US federal tax agency, to revoke Harvard’s tax-exempt status, the Washington Post further reported. It is illegal for the president to direct the IRS to conduct an investigation or audit.
Harrison Fields, a White House spokesperson, told the Washington Post that the IRS began investigating Harvard before the president’s statement and that any investigation would be independent.
“Any forthcoming actions by the IRS will be conducted independently of the president, and investigations into any institution’s violations of its tax status were initiated prior to the president’s TRUTH,” he said, referring to the president’s social media post.
The move is a significant escalation on Trump’s attack on Harvard and his aggressive, multi-pronged assault on institutions of higher education. Stanford University has voiced support for Harvard and other schools have united in support of academic freedom.
Harvard, the flagship in the group of elite, private sector US universities known as the Ivy League, said earlier this week it would not acquiesce to a list of demands from Trump. The US education department responded by freezing $2.3bn in federal funds to the school. Even though the White House is attacking this and other institutions alleging antisemitism and negatively characterizing its teaching and academic culture as overly liberal, the Post further reported on Thursday that a review of documents showed that the government had provided no proof of lawbreaking at Harvard.
US tax law exempts charitable, religious and other social welfare organizations from paying federal taxes. Tax-exempt organizations are also barred from engaging in political activities. There is no evidence Harvard has engaged in any kind of conduct that would cause it to lose its tax exemption.
“There is no legal basis to rescind Harvard’s tax-exempt status,” Jason Newton, a Harvard spokesman, said in a statement to USA Today. “The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.”
Losing tax-exempt status could ultimately cause Harvard to lose billions. Donors would no longer be able to take a federal tax deduction on gifts to the university, and it could have to pay tax on money generated from investment in its endowment, Nathan Goldman, a tax law professor at North Carolina State University, wrote in Forbes.
Addressing reporters in the Oval Office on Thursday, Trump called Harvard a “disgrace” and “obviously antisemitic”. He said it was his understanding that no final decision had been made yet regarding its tax-exempt status.
“Tax exempt status, I mean, it’s a privilege. It’s really a privilege, and it’s been abused by a lot more than Harvard,” Trump said, suggesting that other universities could face similar consequences. “It’s something that these schools really have to be very, very careful with.”