Wealthy D.C. Universities Avoids $111 Million In Local Taxes


Wealthy universities in D.C. have managed to avoid $111 million in local taxes last year. This has gained backlash for educational institutions that seem to have it all: tax breaks and high tuition fees.

It was previously reported that wealthy universities are actually making higher education more difficult to attain by low-income students. Top colleges and universities have a third of all endowment wealth in higher education. Majority of those 138 schools, though, expect low-income families to shell out more than 60 percent of their income to cover the cost of attendance.

Deemed as the "$500 million club," these colleges benefit so much from their endowments because there is no required spending threshold and the funds are exempted from tax. With this, it was noted that these wealthy universities should enroll more low-income students and make education more affordable.

In a recent report by The Washington Post, it was revealed that schools such as George Washington University, Georgetown University, American University and Howard University would have owed $39 million, $9 million, $11 million and $26 million, respectively, in property taxes to Washington, D.C., each year. However, since they are nonprofit organizations, similar to churches, hospitals and the federal government, they are exempted from property taxes.

There have been several concerns about the tax breaks that these wealthy universities enjoy, especially when they have continually raised their tuition fees far in excess of inflation. Congressional hearings have been scheduled for this fall with lawmakers asking 56 universities that each have endowments exceeding $1 billion, for a report on how the money was used as well as the size of their tax-exempt property holdings and whether these institutions make payments in lieu of taxes (PILOTs) to their respective host cities.

"As Congress works toward overhauling the nation's tax code, it's imperative we gather as much information as possible about how preferences in the tax code are applied," Senate Finance Committee Chairman Orrin G. Hatch (R-Utah), said. "This initiative will provide the committee further insight into how university endowments use their tax preferences to fulfill their charitable purposes."

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