Tax deductions have a purpose

A view of Harvard University campus and Holworth Hall on the right and Stoughton Hall on the left in the late autumn when most of the leaves have fallen on Nov. 20, 2010.

Article Highlights

  • No, the government shouldn’t eliminate tax breaks for private universities:

    Tweet This

  • Princeton spent $110 million on student aid last year, many of them would not be attending Princeton absent that aid.

    Tweet This

  • Zeroing out the deduction for private institutions to address noxious extravagances is a cure that’s worse than the disease

    Tweet This

Should government change its tax exemption policies for universities as a way of equalizing educational resources in America? Read More >>

No, the government shouldn’t eliminate tax breaks for private universities. The bigger question of deductions is a complex one. If the proposal were to zero out charitable deductions as part of broader tax reform, that’d be one thing.

"Today’s charitable contributions to private institutions help to fund scholarships for low-income students." - Frederick M. HessHere, however, the question is simpler. The United States Congress first adopted the deduction for gifts to "religious, charitable, scientific or educational" institutions in 1917. Such gifts frequently complement or even substitute for government programs. The intent was to safeguard the web of private institutions that, as Tocqueville observed a century before, undergird our democracy, anchor our communities and act as a firebreak on government.

Today, as Uncle Sam’s reach steadily expands into the financing and regulation of higher education, those on the left and the right who value independent institutions of higher learning should find particular comfort in this practice.

What about the nifty-sounding idea of using the new tax dollars to expand access? Well, the federal government has boosted outlays on higher education by 250 percent, to $170 billion a year, in the past decade. Most of this funding has gone to public institutions. Against this backdrop, the $5 billion or so the proposal would raise seems unlikely to have much impact.

Meanwhile, today’s charitable contributions to private institutions help to fund scholarships for low-income students. For instance, Princeton University has come under fire in this debate, but it’s worth noting that Princeton spent $110 million on student aid last year — providing 60 percent of its students with an average of $35,000. Many of them would not be attending Princeton, absent that aid.

Finally, let’s keep in mind that many public institutions collect a lot more in charitable giving than their private counterparts. I’m not sure why deep-pocketed public institutions like the University of Texas or Ohio State should get to keep raking in deductible gifts alongside state funds, while the Baylors and Oberlins of the world are penalized.

The proposal has a certain facile appeal. But zeroing out the deduction for private institutions to address some noxious extravagances is a cure that’s worse than the disease.

Frederick M. Hess is the director of education policy studies at AEI and author, most recently, of "The Same Thing Over and Over."

Also Visit
AEIdeas Blog The American Magazine
About the Author


Frederick M.
  • An educator, political scientist and author, Frederick M. Hess studies K-12 and higher education issues. His books include "Cage-Busting Leadership," "Breakthrough Leadership in the Digital Age," "The Same Thing Over and Over," "Education Unbound," "Common Sense School Reform," "Revolution at the Margins," and "Spinning Wheels." He is also the author of the popular Education Week blog, "Rick Hess Straight Up." Hess's work has appeared in scholarly and popular outlets such as Teachers College Record, Harvard Education Review, Social Science Quarterly, Urban Affairs Review, American Politics Quarterly, The Chronicle of Higher Education, Phi Delta Kappan, Educational Leadership, U.S. News & World Report, National Affairs, the Washington Post, the New York Times, The Wall Street Journal, the Atlantic and National Review. He has edited widely cited volumes on the Common Core, the role of for-profits in education, education philanthropy, school costs and productivity, the impact of education research, and No Child Left Behind.  Hess serves as executive editor of Education Next, as lead faculty member for the Rice Education Entrepreneurship Program, and on the review boards for the Broad Prize in Urban Education and the Broad Prize for Public Charter Schools. He also serves on the boards of directors of the National Association of Charter School Authorizers and 4.0 SCHOOLS. A former high school social studies teacher, he teaches or has taught at the University of Virginia, the University of Pennsylvania, Georgetown University, Rice University and Harvard University. He holds an M.A. and Ph.D. in Government, as well as an M.Ed. in Teaching and Curriculum, from Harvard University.

    Follow AEI Education Policy on Twitter

    Follow Frederick M. Hess on Twitter.

  • Email:
  • Assistant Info

    Name: Sarah DuPre
    Phone: 202-862-7160

What's new on AEI

image The Census Bureau and Obamacare: Dumb decision? Yes. Conspiracy? No.
image A 'three-state solution' for Middle East peace
image Give the CBO long-range tools
image The coming collapse of India's communists
AEI on Facebook
Events Calendar
  • 21
  • 22
  • 23
  • 24
  • 25
Wednesday, April 23, 2014 | 12:00 p.m. – 1:30 p.m.
Graduation day: How dads’ involvement impacts higher education success

Join a diverse group of panelists — including sociologists, education experts, and students — for a discussion of how public policy and culture can help families lay a firmer foundation for their children’s educational success, and of how the effects of paternal involvement vary by socioeconomic background.

Thursday, April 24, 2014 | 12:00 p.m. – 1:30 p.m.
Getting it right: A better strategy to defeat al Qaeda

This event will coincide with the release of a new report by AEI’s Mary Habeck, which analyzes why current national security policy is failing to stop the advancement of al Qaeda and its affiliates and what the US can do to develop a successful strategy to defeat this enemy.

Friday, April 25, 2014 | 9:15 a.m. – 1:15 p.m.
Obamacare’s rocky start and uncertain future

During this event, experts with many different views on the ACA will offer their predictions for the future.   

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.