STEPHEN MOORE: Stop Pretending Colleges Are Not-For-Profit Institutions

Here’s a recent story from the Chicago Tribune that jumped off the page when I read it. Northwestern University (NU), located outside of Chicago, is finishing up the construction of a new $800 million football stadium.  This is supposedly a nonprofit “educational” entity.

Uh huh.

Northwestern – an “institution of higher learning” is flush with cash. It has an endowment of nearly $15 billion, and the tax-free donations keep flowing in.

As a kid who attended NU games, I can attest that the old Dyche Stadium was a great place to see a game. For one-tenth the cost of this new palace, the old stadium could have been refurbished.

Almost all of the $800 million for the lavish Taj Mahal football stadium on the shores of Lake Michigan rivals the professional sports arenas with luxury skyboxes and opulent décor and was donated to the school with tax-deductible dollars. About half the money came from Pat Ryan, a multi-billionaire. No word yet as to whether the Northwestern stadium will come with hot tubs in the end zones.

Meanwhile, the universities are now paying star football players millions of dollars thanks to the new “portal” rules. Many athletes in basketball and football are now selling their passing, tackling, and dunking skills each year to the highest bidder. They can often make more money playing for the old U than if they played in professional leagues like the NFL or NBA.

This is pay-to-play athletics. It won’t be long before the women on the college volleyball teams are paid to play. The star athletes have been exploited by the colleges for years, and now they are getting their just dues.

Don’t get me wrong. I love college sports and will be riveted to the Indiana – Miami national championship game.  This is a great product, and we are seeing the best teams money can buy.

But when will Congress stop buying into this mythology that colleges are nonprofit organizations? Why should donations from millionaires and billionaires be IRS tax write-offs?  It’s farcical.

It also costs taxpayers a small fortune. Northwestern’s donors will get tax deductions worth almost $200 million.

This makes as much sense as allowing the Chicago Bears to sign the best quarterback and free safety tax free.

Don’t forget also that universities have other absurd tax advantages.  They generally are exempt from property taxes as well — which means the rest of us pay more.

Universities are supposed to be educational institutions, not semi-pro leagues. To treat them in the tax code as if they were the equivalent of homeless shelters, food banks, and the Salvation Army is a fantasy.

Universities are big business. The “amateur student athletes” are de facto professionals. Many rarely, if ever, attend a class. Some of them are 25 and 26 years old.

The cost to the Treasury of the tax loophole for colleges is enormous. Colleges have a combined endowment today of nearly $1 trillion. Almost none of this money was ever taxed. These government subsidies to universities are on top of the trillion dollars of student loan subsidies, debts many of which will never be paid back by the former students.

If this giant loophole were plugged, tax rates for families and legitimate businesses could fall by 10 to 15%.

When I attended the University of Illinois, we used to joke that our school motto was “We never let academics stand in the way of a winning football and basketball team.”

Now the universities don’t let money stand in the way of a great team either. And the federal tax code encourages the “best team money can buy” mentality.

Let’s face it. If an institution can spend $800 million on a football stadium, it can afford to pay its fair share of taxes.

Stephen Moore is a former Trump economic advisor and co-founder of Unleash Prosperity.  

 The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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