The Atlantic: The Conservative Case for Leaving Harvard Alone, by Conor Clarke (Washington University; Google Scholar):
The Supreme Court precedent allowing the IRS to revoke a university’s tax-exempt status is a textualist’s nightmare.
The past few days have seen a dramatic escalation in the Trump administration’s brawl with universities in general and with Harvard in particular. According to multiple reports, the IRS has begun planning to revoke the university’s tax-exempt status. Losing exemption from income taxation would be disastrous for Harvard. Not only does exemption save universities enormous amounts of money that would otherwise be taxed; it is also essential for fundraising, because it allows donors to take charitable deductions.
What is the rationale for the IRS revisiting Harvard’s exemption status? A theory is needed, because section 501(c)(3) of the federal tax code says that an organization “shall”—not “may”—be exempt from taxation if it meets criteria listed in the statute. One of those criteria is for an institution to be organized exclusively for “educational purposes.”
The Trump administration—which shoots first and theorizes later—has not said much. But an intellectual agenda has been building recently to challenge the exempt status of universities and other organizations viewed as left-leaning. (You can see that momentum gathering steam on the Wall Street Journal editorial page here, here, and here.) The unifying theory of this movement is to make expansive new use of a 1983 Supreme Court decision, Bob Jones University v. United States.
Bob Jones was (and is) a conservative-Christian university with a history of racial discrimination, which the university once claimed was rooted in biblical principles. After a long and tangled back-and-forth, the IRS revoked the university’s tax-exempt status in the 1970s, and the university challenged that revocation. In a fascinating and elusive 8–1 decision, the Supreme Court upheld the IRS decision as consistent with the tax code and the Constitution. Why? Because, notwithstanding the language about “educational purposes,” the Court held that, to qualify for the exemption, an organization must show “that its activity is not contrary to settled public policy.” The Court purported to deduce support for that standard from the overall purpose of the tax code.
Strikingly, the IRS has made virtually no attempt to wield this seemingly expansive “public policy” restriction in the years since Bob Jones was decided—and the Supreme Court has therefore had no occasion to clarify the bounds of its fuzzy doctrine. This is all for good reason. Conservatives, in particular, should be wary of far-reaching claims of administrative authority to decide what is within “settled public policy” and what is not. …
Despite its practical obsolescence, of course, Bob Jones still remains the law of the land—lying around like a loaded weapon for an executive branch willing to overlook its flaws. But there are good reasons that it has never been picked up before. Conservatives, more than anyone, should oppose its impetuous new use.
Eugene Volokh (UCLA; Google Scholar), Can Harvard Lose Tax Exemption for "Pushing Political, Ideological, and Terrorist Inspired/Supporting 'Sickness'"?:
Just as the government can't generally deny tax exemptions to groups that engage in supposed "hate speech," so it may not deny tax exemptions to universities that promote or tolerate ideological agendas that the government disapproves of.
President Trump suggested on April 15 that:
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!
The IRS is apparently planning something along those lines, though the details are unclear. But, if Harvard was indeed stripped of its tax exemption because of the "political, ideological, and terrorist inspired" views that it "push[es]," would that be consistent with the First Amendment? (I set aside here the separate question whether there may be federal statutory or administrative law constraints applicable here.)
The answer is "no," as I argued to a Democrat-controlled House subcommittee in 2019, and before that in 2016 (and as Dale Carpenter elaborated on in 2019). Like other such programs that protect a wide range of private speech in order to serve the "public interest," the government can't define the scope of the program or the term "public interest" in a way that turns on the viewpoint that the speaker expresses. My testimony focused on calls for stripping tax exemptions from groups that allegedly engaged in "hate speech," but the same analysis applies to other viewpoint-based denials as well.
- Randy Barnett (Georgetown), People Should Familiarize Themselves with Bob Jones
- Hot Air, Will Trump Do a Bob Jones on Haahvaahd?
- Legal Insurrection, Trump Drops the Big One on Harvard, Asks IRS to Revoke Their Tax-Exempt Status
- Power Line, Harvard, Meet Bob Jones
- Jonathan Turley (George Washington), No, Harvard Should Not Lose its Tax-Exempt Status
- Michael Dorf (Cornell; Google Scholar), Wait, Can He Actually Do That? Part 15: Trump's Threat to Revoke Harvard's Tax-Exempt Status
- New York Times, I.R.S. Is Said to Be Considering Whether to Revoke Harvard’s Tax-Exempt Status
- New York Times, What Is Tax-Exempt Status and Can the I.R.S. Revoke It From Harvard?
- New York Times, With Harvard Threat, Trump Tries to Bend the I.R.S. to His Will
- NPR, History Shows Revoking Harvard's Tax Status Won't be Easy — Or Fast
- Slate, The Many Legal Hurdles Facing Trump’s Bid to Strip Harvard of Tax-Exempt Status
- USA Today, Harvard Would be Smart to Follow Hillsdale's Playbook. Trump Should Avoid Biden's.
- Wall Street Journal, GOP Accused Democrats of Politicizing IRS. Now Trump Wants It to Punish Harvard.
- Wall Street Journal, Trump Administration Asks IRS to Start Process to Revoke Harvard’s Tax-Exempt Status
- Washington Post, Can Trump Revoke Harvard’s Tax-Exempt Status? What to Know About the Law.
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