National Review Online
Monday, May 05, 2025
The war between Donald Trump and Harvard may be entering
a new phase. Just weeks after Trump froze $2 billion of Harvard University’s
federal funding and placed the rest under review, triggering a federal lawsuit
from the university, the president is vowing to strip Harvard of its tax exemption.
Stop us if you’ve heard this story before. Once again, Trump is extending
powers once used and cheered by his opponents. Once again, there is some policy
merit to his position, as well as a key legal precedent on his side. Once
again, he is going about this in ham-fisted fashion that could undermine his
legal case. And once again, what should happen is to permanently
restrict the vast discretion wielded by the executive branch and reclaim
policymaking authority that by rights belongs to Congress.
We continue to worry that Trump is expanding the
unilateral powers of the executive in ways that are likely to be abused by
future presidents — especially against conservatives. That remains true even if
there is a policy case for what he is doing and even if it may be arguably
within powers the law now allows him.
The immediate impetus for Trump’s action is the
administration’s concern over campus antisemitism and race discrimination in
admissions, including an investigation into discrimination by the Harvard Law
Review. The story, however, really begins with Bob Jones University v.
United States (1983). The Evangelical Christian university in South
Carolina, which only began to admit black students in 1971, banned interracial
dating or marriage on campus and barred admission of students in an interracial
marriage. The Internal Revenue Service revoked its tax exemption for having a
racially discriminatory policy, leading to years of litigation that landed in
the Supreme Court’s lap in 1982.
The problem: the IRS had no statutory authority to
withdraw a tax exemption over race discrimination. Indeed, nothing in the
Internal Revenue Code said anything at all about revoking a Section 501(c)(3)
tax exemption for any public policy reason. We warned at the time that “the
danger involved here is that the power of the IRS to make ad hoc law will be
legitimized,” threatening “the very process of making laws in this country.” An
editorial in Regulation magazine, then edited by Antonin Scalia, described the IRS as “engaging in an audacious bit of
activism” that “opened the tax-exemption section . . . to continuing policy
making by the IRS and the courts” such that “if the public policy against
racial discrimination is thus imported into the internal Revenue Code, then so,
presumably, are other public policies that can be identified by the [IRS] or
the courts.”
Bob Jones University’s position was idiosyncratic,
morally indefensible, and hugely unpopular, which made it a hard case in which
to defend constitutional principles. Nonetheless, in a courageous if
politically ill-considered stance, the Reagan administration sided with Bob
Jones and ordered the IRS to reverse course. That decision didn’t last a
weekend, but after Reagan backed down in the face of a firestorm, his Justice
Department argued that the IRS rule exceeded its authority, requiring the Court
to appoint a lawyer outside the government to defend it. At the same time,
Reagan called on Congress to give the IRS the authority it claimed but limited
by statute to race discrimination.
The result was an 8–1 victory for the taxman that didn’t
even pretend to apply the law written by Congress, instead citing the “common
community conscience,” “fundamental public policy” in other laws against race
discrimination, deference to the IRS in construing its statute, statements in
the legislative history, and subsequent inaction by Congress — all methods of
interpretation the current Court would eschew. Only then-Justice William
Rehnquist dissented from empowering the executive branch to revoke tax
exemptions in the name of a legally undefined view of the public good,
observing that “regardless of our view on the propriety of Congress’ failure to
legislate we are not constitutionally empowered to act for them.”
The wages of Bob Jones have come due. As John Yoo
and Robert Delahunty have argued, if the IRS and the Court were right then, the
executive can invoke similar powers today to fight race discrimination and
antisemitism, not only at Harvard but at other universities and nonprofits as
well.
In our view, this shows why the Court’s decision was
mischievous and why the Reagan administration was right to resist it. The
reasoning of Bob Jones was hard to cabin by reference to any written
rule of law, and it will be harder to cabin if it is extended to Harvard. It
would put a sword of Damocles over the head of every nonprofit group in the
country, a weapon that progressives will not shirk at using against religious
institutions and others they brand “racist,” “homophobic,” “transphobic,” or
otherwise insufficiently aligned with the latest fashions of the academic left.
The benefits of using this weapon today are apt to be outweighed when it is wholly
unconstrained tomorrow.
If Harvard’s tax-exempt status should be revoked, that
decision should be made by Congress, or at any rate under standards written by
Congress rather than by the president’s (or the courts’) sense of the “common
community conscience.” There is a fair argument that the tax exemption for
private universities is counterproductive in today’s higher education system,
in which the universities compile colossal untaxed endowments (Harvard’s
exceeds $53 billion), receive massive direct and indirect federal subsidies for
research and financial aid while depending financially on the tuition of
foreigners from nations hostile to us, spend that money employing hordes of
bureaucrats uninvolved in teaching anything to anyone, promote doctrines inimical
to the values of the Declaration of Independence and the Constitution, and
saddle their graduates with exorbitant debt.
But that case should be debated by the legislature. It
implicates broad questions of public policy. It’s not as if the problems of
campus antisemitism and resistance to race-blind admissions are especially
unique to Harvard. Congress can decide how to balance the contending issues of
tax exemption and subsidy. It can decide whether universities should be treated
differently from, say, hospitals or soup kitchens; if it limits rather than
repeals the exemption, it can decide what procedural protections to offer
universities who are singled out. Just because Harvard richly deserves this
doesn’t mean that the law should be made ad hoc, one college at a time, under
standards never ratified by the people’s representatives and whose application
can’t be predicted in the future.
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