As charitable institutions, most of our colleges and universities are tax-exempt. Sometimes, however, they make voluntary payments to local governments. Is this situation satisfactory?
Well, yes, it is for the wealthy schools, but in today’s Martin Center article, Walt Gardner argues that it is not satisfactory from society’s standpoint. Colleges are supposed to serve the public interest, but, Gardner says, they haven’t held up their end of the bargain, becoming places for indoctrination more than education.
Some colleges make voluntary payments in lieu of taxes (PILOT), but Gardner thinks that is a weak arrangement, writing:
The amount of PILOT payments depends solely on negotiation, since cities have no legal leverage. This obviously works in favor of colleges and universities because of the flexibility it gives them to respond to rapidly changing events. When the payments are generous, they go a long way toward building goodwill between town and gown. Nevertheless, regardless of how much revenue is collected, it will never satisfy everyone.
Furthermore, many colleges are intertwined with commercial enterprises. Why should they be tax-exempt when their free-market competitors are taxed?
Read the whole thing.