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Trump says US will review universities' tax-exempt status

Jordan Fabian, Bloomberg News on

Published in Political News

WASHINGTON -- President Donald Trump ordered the Treasury Department on Friday to review the tax-exempt status of colleges and universities, following his threats to cut federal funding to schools that do not reopen due to the coronavirus pandemic.

The president's attack on institutions of higher education comes as they're struggling with how to handle the upcoming fall semester due to the virus, which has dealt a financial blow to many.

In a pair of tweets, Trump accused institutions of higher education of focusing on "Radical Left Indoctrination" rather than educating their students.

"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!" Trump said in a pair of tweets made while traveling to Florida.

Some schools, including Stanford University and Dartmouth College, have announced they're cutting varsity sports programs and staff positions to address budget crunches made worse by COVID-19.

Johns Hopkins University disclosed in April that it will suspend contributions to employee retirement accounts, cut the salaries of its highest-ranking officers, and prepare for furloughs and layoffs, according to The Washington Post.

 

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 nonprofit or educational part of the university.

"Any drastic or dramatic change would require Congress to act," said James Lucier, an analyst at Capital Alpha Partners LLC in Washington.

Universities are also heavily reliant on the federal government for research contracts, which Lucier said the Trump administration could curtail.

Trump this week has intensified pressure on schools to reopen, threatening to cut off federal education funding to those that do not fully welcome back students and criticizing guidance from the U.S. Centers for Disease Control and Prevention as too burdensome.

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