Trump Threatens Tax-Exempt Status and Funding for ‘Radical Left’ Universities

Trump Threatens Tax-Exempt Status and Funding for ‘Radical Left’ Universities

Kevin Lamarque/Reuters

President Trump on Friday continued to put pressure on American schools, charging that “too many” universities are about “radical left indoctrination” rather than education. As a result, the president said, he was instructing the Treasury Department to “re-examine" the tax-exempt status and funding of universities. Most colleges and universities are exempt from taxes as 501(c)(3) organizations.

In a pair of tweets sent while on his way to events in Florida, Trump said: "Too many Universities and School Systems are about Radical Left Indoctrination, not Education. Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status... and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues. Our children must be Educated, not Indoctrinated!"

Earlier in the week, Trump had threatened to cut federal funding from schools if they don't reopen this fall.

What Trump is doing: “This is an old issue for conservatives that the president is now tapping into as part of his broader culture war conversation he's been stoking in recent days and weeks," Peter Baker of The New York Times said.

What Trump could do: “It would fall to the IRS, a bureau of the Treasury Department, to conduct the review that Trump described. However, federal law prohibits the IRS from targeting groups for regulatory scrutiny ‘based on their ideological beliefs,’” The Hill’s Morgan Chalfant reports.

Bloomberg’s Jordan Fabian further explains: “Trump’s power to drastically alter universities’ tax exemption is limited, but he could make policy changes that could hurt their bottom lines. For example, the Treasury Department could make changes through regulations, such as the Unrelated Business Income Tax, which pertains to profits earned through a part of the school that is not substantially related to the non-profit or educational part of the university.”

Universities also rely on federal research grants and they’ll need emergency coronavirus response funds, which the administration reportedly may be able to curtail, but broader changes would require congressional action, which is highly unlikely.