Tags: elite universities | tax exempt | inequality

IRS Can and Should Strip Elite Universities of Tax-Exempt Status

IRS Can and Should Strip Elite Universities of Tax-Exempt Status
(Mohd Haniff Abas/Dreamstime.com)

Monday, 30 July 2018 11:25 AM Current | Bio | Archive

As I argued last month, highly selective universities (Ivy League, Stanford, Duke, etc.) are not in the public interest.

It may well be advantageous for students to attend universities with extremely selective admissions (10 percent or lower), but it is distinctly disadvantageous for society at large to have so many of our best and brightest young people concentrated in a small number of elite universities. Given the 1983 Supreme Court decision of Bob Jones University vs. United States (461 US 574), the IRS has the authority to declare that highly selective universities operate in a way that is contrary to public policy, and so are not charitable institutions qualified for tax exemption and for tax-deductible contributions.

Bob Jones University is a fundamentalist university in Virginia that had banned inter-racial dating and marriage within its student body. BJU refused to admit and would even expel students in inter-racial relationships. In 1971, the IRS stripped Bob Jones of its tax-exempt status and ruled that it would not treat gifts to Bob Jones as charitable deductions for income tax purposes. The IRS did all this without explicit Congressional approval, appealing to the ancient common law principle that a “charity” must confer a public benefit — something “which supplements or advances the work of public institutions already supported by tax revenues,” as Chief Justice Burger put it. Burger and the Court ruled that a charity must not be “contrary to public policy.” According to the Court, “Congress has seen fit to vest in those administering the tax laws very broad authority to interpret those laws.” The IRS must be free to do so in order to “meet changing conditions and new problems.”

Hyper-selective colleges are precisely the sort of “new problem” that calls for prompt IRS action. As Charles Murray documents in "Coming Apart," selective admissions are a relatively new phenomenon. According to a study done in 1926, the average IQ of students at the most prestigious universities (like the Ivy League) was just 117, barely above the 115 average for all college students. This changed radically in the 50’s and 60’s. The average Harvard freshman in 1952 would have been in the bottom 10 percent by 1960. As Murray notes, “Together, just 10 schools took 20 percent of all the students in the United States who scored in the top 5 percent on the SAT or ACT. Forty-one schools accounted for half of them.”

This practice of extreme cognitive segregation hurts American society in many ways. First, the removal of the brightest students from regional and state schools negatively affects the education of the remaining students. As a professional educator for over 30 years, I can attest to the fact that students learn more from their peers than they do from their professors. In addition, when the brightest students are absent, an inevitable dumbing-down of the curriculum results.

Second, when the cognitively brilliant concentrate in a few elite universities, they grow up within a cultural bubble, never learning to understand or to sympathize with their less gifted compatriots. Since these students will be the political, business, cultural, and educational leaders of the future, such cultural isolation from the majority results in an empathy gap of disturbing dimension.

Third, segregation by cognitive ability exacerbates income inequality. Colleges and professionals schools create communities in which members are likely to pick fellow members as their spouses. Selective admissions have increased the phenomenon of “homogamy,” in which people marry others very like themselves in cognitive ability and educational attainment. In a world of two-income couples, this immediately doubles the inequalities generated by higher pay for brighter workers. It also increases the disparities of cognitive ability within the next generation, as having two highly intelligent parents greatly increases (whether from genetics or environment or both) the probability of a child’s having exceptionally high abilities. As Murray documents (p. 60), parents who attended elite colleges “produce a disproportionate number of the smartest children.” We run the risk of creating a permanent caste of cognitive elites who are able to dominate the economic and political landscape for many generations to come.

The IRS could immediately strip the tax-exempt status from any public or private institution that admits fewer than 20 percent of its qualified applicants. If a college cannot accommodate all who are admitted, it can use a lottery to distribute places randomly among the admitted, or it can use geographic proximity of the applicant’s home, or a combination of these. We can exempt graduate programs in highly technical fields, such as math, physics, or medicine. We should not make an exception, however, for law schools or business schools, since these seek to provide general training for future leaders. In order to qualify for tax-exempt status, a college or university would have to eliminate hyper-selective admission practices in all of its constituent units.

Rob Koons is a professor of philosophy specializing in logic, metaphysics, philosophical theology, and political thought. He is the author and editor of six books, including "The Atlas of Reality: A Comprehensive Guide to Metaphysics" (with Tim Pickavance, Wiley-Blackwell, 2017). He has been active in conservative circles, both nationally and in Texas, including the Intercollegiate Studies Institute, the National Association of Scholars, the Texas Public Policy Foundation, the Philadelphia Society, and the Austin Institute for the Study of Family and Culture. To read more of his reports — Click Here Now.

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As I argued last month, highly selective universities (Ivy League, Stanford, Duke, etc.) are not in the public interest.
elite universities, tax exempt, inequality
Monday, 30 July 2018 11:25 AM
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