Trump's tax fight with Harvard sends chill through nonprofit sector
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President Trump's legally dubious threat to strip Harvard's tax-exempt status could cost the university hundreds of millions a year, and other nonprofits fear they could be next.
Why it matters: Trump has waged an unprecedented assault on the independence of universities, law firms, and nonprofit media, using the power of the government to punish his perceived political enemies.
By the numbers: Harvard's property tax benefits totaled at least $456 million in 2023, per a Bloomberg News analysis.
- Taxes on its endowment could total $800 million annually, per the Chronicle of Higher Education.
- Losing its tax-exempt status, also means donations to Harvard would no longer be tax deductible, and the bonds it sells to fund improvements wouldn't be tax free.
Threat level: Harvard's president, Alan Garber, told the Wall Street Journal Friday that Trump's threats are "highly illegal, unless there is some reasoning that we have not been exposed to that would justify this dramatic move."
- Other nonprofits warn that Trump's threats set a worrying precedent.
- "If the Trump Administration can silence universities today, who will be next?" Diane Yentel, president and CEO of the National Council of Nonprofits, said. "This is not just an isolated policy; it's an existential threat to the entire nonprofit sector.
- "Weaponizing the IRS and the tax code to attack the president's ideological opponents is a dangerous precedent," Tyler Coward, lead counsel for government affairs for the Foundation for Individual Rights and Expression, said.
- The Trump administration did not immediately respond to Axios' request for comment.
Zoom out: Trump's threats could very well be illegal because tax law prohibits the president and other senior government officials from asking the IRS to investigate an individual taxpayer.
- The IRS has previously revoked nonprofits' tax-exempt status when audits have found that political or commercial activities violated the terms of eligibility, per the New York Times.
- The IRS has challenged some schools under both Republican and Democratic administrations, but it has rarely revoked their tax-exempt status.
- Senate Minority Leader Chuck Schumer (D-N.Y.) and three other Democratic senators on Friday urged the acting U.S. inspector general to open an investigation into Trump's tax threats against Harvard, which they called "illegal and unconstitutional."
- In their letter, the senators warned that Trump could also target churches, synagogues, nonprofit hospitals and clinics, and charter and private schools.
The bottom line: "The message that it sends to the educational community would be a very dire one," Garber said Friday, "which suggests that political disagreements could be used as a basis to pose what might be an existential threat to so many educational institutions."
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