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Time to rethink tax exemption for universities that compete with private sector

When you think of a nonprofit, do you think of a sprawling organization that dominates its town economy, forces up everyone else’s property taxes, and has an endowment in the $27-37 billion range?

Does it make sense for these institutions to pay no taxes?

Jenna Robinson, president of the North Carolina-based Martin Center for Academic Renewal, looks at some opportunities to make these plutocratic bastions of left-wing indoctrination ruled by money-grubbing financial wizards pay their fair share.

Writing in The Herald Sun, Robinson proposes targeting these institutions’ voluminous commercial activities rather than their endowments, an example set by the Connecticut Legislature’s failed Yale-specific bill:

Last year, the Senate Committee on Finance and the House Committee on Ways and Means requested information from the 56 private universities in the United States with endowments worth more than $1 billion, including Duke University and Wake Forest University in Winston-Salem. …

Although most of the committees’ questions concerned the universities’ endowments, the size of their tax-exempt property holdings was also of interest. As education reformers writing in the Washington Post revealed, many wealthy universities own extensive – and valuable – real estate. Harvard alone holds 25 million square feet of property. The article’s authors conclude that automatic property tax exemptions for universities should be on the table for debate.


North Carolina educational institutions look a lot like ordinary commercial interests, Robinson notes:

The PNC Arena in Raleigh is the home of NC State Basketball. But it also hosts professional hockey games, concerts, and events like “Disney on Ice.”

The Carolina Inn at UNC-Chapel Hill bills itself as “the only hotel on campus!” It provides event space for UNC Board of Trustees meetings and rooms for university visitors. But it also rents space for wedding receptions, parties, and meetings. Rooms start at $198 per night.

The Washington Duke Inn (owned by Duke University) has an 18-hole championship golf course, home of the Duke University Golf Club. Six PGA Professionals and one Master PGA Professional are on staff and available for group or private lessons.

At the least, municipalities should seek PILOT agreements – payment in lieu of taxes – from their local colleges and universities, similar to the pittance of $10 million Harvard has paid Cambridge, Robinson argues.

They are sucking off the government teat for public services such as police and fire without paying for it, unlike all other property owners:

[I]nstitutions that sell commercial goods in competition with private businesses are not providing public goods and should not be regarded as non-profit institutions while engaging in commercial activities.

Nor should local taxpayers bear the burden of universities’ business ventures or unfettered expansion. Higher education’s commercial activities should be treated as what they are: big business. And taxed accordingly.

Read the op-ed.

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