Wall Street Journal Op-Ed:  Harvard Should Pay Its Fair Share, by Richard Vedder (Ohio University):

What can we do about the corruption of American higher education? Milton Friedman had an idea 20 years ago: Tax the schools rather than subsidize them. That reflected a change of heart. In “Capitalism and Freedom” (1960), he argued that college education had enough “positive externalities” to justify subsidies. But when I was researching a book in 2003, I emailed him (then 91) and asked if he still believed that.

He replied: “I have not changed my view that higher education has some positive externality, but I have become much more aware that it also has negative externalities. I am much more dubious than I was . . . that there is any justification at all for government subsidy of higher education. The spread of PC”—political correctness—“would seem to be a very strong negative externality, and certainly the 1960s student demonstrations were negative externalities. . . . A full analysis along those lines might lead you to conclude that higher education should be taxed to offset its negative externalities.”

The past 20 years have seen negative externalities multiply: discriminatory hiring, promotion and contracting; the exclusion of conservative scholars; the suppression of speech. The case for taxing universities is stronger than ever. …

Why should ordinary citizens pay a 23.8% tax on capital gains while Harvard, with its $50 billion endowment, pays nothing?