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HomeBrasilTrump threatens Harvard’s tax-exempt status after university refuses to cave to demands...

Trump threatens Harvard’s tax-exempt status after university refuses to cave to demands – US politics live | US news

Trump threatens Harvard’s tax-exempt status after university refuses to cave to administration’s demands

Donald Trump has said Harvard “should lose its tax exempt status” and be taxed as a political entity after the Ivy League school rejected what it said was an attempt at “government regulation” of the university.

In a post on his Truth Social platform, Trump wrote:

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!

Most universities, including Harvard, are exempt from federal income taxes because they are classified as providing a public good.

The latest escalation comes after the Trump administration elected to cut $2bn of Harvard’s federal grants after the university refused to cave in to what the president has called an effort to curb antisemitism on campus. Many educators, however, see the administration’s list of demands as a thinly veiled effort to more broadly curb academic freedoms.

Former president Barack Obama praised Harvard for setting an example for other higher education institutions to reject federal overreach into its governance practices.

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The vast majority of US private and public universities and colleges are tax-exempt entities because of their educational purposes – purposes including teaching, research and public services, that the federal government has long recognized as fundamental to fostering the productive and civic capacities of citizens – and/or the fact that they are state governmental entities. In turn, state governments usually grant tax-exempt status to such organizations.

The federal tax code classifies tax-exempt colleges and universities and their foundations as public charities, which means they’re not subject to tax on investment income, payout requirements, or other rules that apply to private foundations.

Here are the requirements from the IRS:

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.

The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.

Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct.

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