To Avoid a Harvard-Sized Endowment Tax, Universities Should Avoid Harvard’s Actions

For decades, the country’s most elite universities have accumulated massive endowments largely tax-free, and by virtue of their protected nonprofit status have become shelters of wealth donated by the rich and powerful.

But as recent Supreme Court cases have discovered, the flashiest and gaudiest few—most notably Harvard University and the Ivy Leagues—have used this privilege against Americans themselves, rewarding children of billionaires who donate millions with admissions spots while discriminating against those who work hard to get in by merit.

They have also allowed their campuses to become breeding grounds for violent activism and have overlooked qualifications in their rush to employ “DEI hires” for high-level positions, which has resulted in academic mismanagement, including overlooking plagiarism by Harvard’s former president, Claudine Gay.

As President Trump recently posted on Truth Social, “Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!”

He certainly has a point—although he lacks control of Harvard’s nonprofit status, which is up to the IRS to determine.

There is another lever that will likely be used to keep universities in check: an endowment tax, which could be authorized by Congress this year. First draft versions have already been introduced, and in response, universities are hiring lobbying firms and sending their presidents to plead against the tax, arguing that it would hamper their ability to support students.

The endowment tax will be progressive. According to the first iteration of the bill, it will mainly apply to universities with endowments of over $500,000 per student, and scholarship aid to students will likely mitigate some of the tax. Universities with endowments above $2 million per student (the Ivy Leagues and a few select universities) will be taxed at up to 21 percent of accrued investment income.

The bottom line among those pushing for the tax, however, remains clear: the Ivies are its main targets.

This is also shown by the Trump administration’s recent rescission of more than $2 billion in funding to Harvard and $400 million to Columbia. Here are ways other universities can argue that they shouldn’t be taxed (and have their public funding rescinded) to the same degree as the “lost” universities such as the Ivy Leagues.

First, they should adopt the U-Michigan Model on DEI. Called “DEI 2.0.” and introduced by outgoing president Santa Ono, it is focused on curbing unnecessary administrative bureaucracies, pledging to audit its own finances and lowering costs for students. What greater gift to underprivileged students could you give than a lower tuition, anyways? Efficiency and cutting costs should be the next value proposition for universities.

Secondly, they should submit to civil rights guidance that stresses merit above all. When Harvard fought (and lost) a consequential case finding illegal discrimination against Asian Americans in the name of DEI, universities can prove to legislators that they do not discriminate by race by releasing reports showing their admissions categorized by race, GPAs, and test scores. Discrepancies should be resolved, and those too stubborn to implement merit-based admissions should be taxed and punished. This would also solve the double problem of legacy admissions: admitting students based on family connections or wealth rather than merit.

Thirdly, they should show that they understand that violent protests on campus should never be tolerated. Students are free to participate in free-speech dialogue at universities, and universities need to do a better job of creating forums and spaces where students learn how to argue their points. But there must be a clear message sent out to students, and policies enforced: if you have to resort to violence to spread your message, you deserve to be punished for it. Universities must communicate, unlike the inept Columbia University, that they have a strict no-tolerance policy for politically motivated violence on campus.

Fourth, they should commit to intellectual diversity in the academic profession. If just 4 percent of your university's professors are registered Republicans—as at my alma mater Davidson College—it has a problem which needs to be solve. Often, the root of this problem lies in social justice agendas enforced by deans of faculty—bias against conservatives that lead to ideological monothink. Universities must show that they are investing in resources that will counter the shutout of conservative opinion on campuses—which leads to many of the problems we currently have at universities in the first place.

Fifth, universities now have an incentive to isolate and reject Harvard. As Harvard seeks to take what it sees as some great moral stand against the Trump administration, it is time for our other great universities to call it out for its foolishness. Harvard seeks allies, but joining them means joining an ideological cabal bent on resisting influence rather than solving their own problems. Universities should be the grown ups here and call out Harvard for its insouciance.

The endowment tax will just be one of many ways that the Trump Administration and Congress, emboldened by a mandate from the people, will put pressure on universities to reform.

Universities: take a hint. Realize you are out of step with the American people on this and submit to guidance on admissions, DEI bureaucracy, hiring, and campus protests.

Harvard is a lost cause, and I would tax its university endowment up to 100 percent if I could. But your university doesn’t have to be associated with the likes of them. Tell your university to reject Harvard and its academic cabal. Focus on improving and making your university better for all your students instead.

(READ MORE: From the Russia Hoax to Biden's Dementia, the Liberal Media Gets Its Narratives from Harvard's Shorenstein Center)