That is the question James Piereson and Naomi Shaefer Riley raise in an op-ed in today’s Wall Street Journal.
Good question. Hiding behind their status as non-profit entities, many colleges and universities spend lavishly, often on things having little to do with education. If they were taxed, what lower-priority expenditures would be cut? On the other hand, if they were taxed, that transfers wealth to the local politicians, who are just as famous for squandering money. The notion that the people who live in town would see their taxes go down if Princeton were treated like a business strikes me as unrealistic. The politicians would undoubtedly find that they needed to spend the cash infusion.