'Jeff Bezos' Of Universities Harvard's $465M Tax Benefits Draw Scrutiny, A Year After Trump's VP Pick JD Vance's Bill Was Blocked By Democrats (UPDATED)

Editor’s Note: This story has been updated to clarify that Citadel CEO Kenneth C. Griffin had previously donated over $500 million to Harvard.

Harvard University’s tax-exempt status and the resulting financial benefits have come under increased scrutiny. The university’s property, valued at over $290 million, would have generated millions in property taxes if owned by a corporation. However, Harvard, being a private college, pays no taxes.

What Happened: The U.S. tax code allows approximately 1,700 private colleges, including Harvard, to operate as nonprofits due to their societal contributions. However, elite universities like Harvard are facing increasing criticism over their handling of their vast wealth, Bloomberg reported on Friday.

Harvard, the oldest and wealthiest U.S. university with an endowment of over $50 billion, is at the center of the debate over the financial benefits schools reap from their tax-exempt status. This issue is particularly relevant in Boston, where Harvard’s expanding presence and the city’s declining commercial property values are prompting local officials to seek more contributions from higher-education institutions.

Last year, Donald Trump‘s vice presidential pick, J.D. Vance (R-Ohio), who referred to Harvard as a “woke social justice hedge fund,” spearheaded legislation aimed at increasing the tax on endowment investment gains for the wealthiest universities. However, the bill was blocked by Democrats.

Some members of Congress have threatened to reconsider tax-exempt status for schools in light of controversies surrounding campus antisemitism and protests of the Israel-Gaza war.

"Harvard is a very rich and very high-profile organization," said Adam Looney, a Harvard-trained economist who worked in tax analysis for the Treasury Department, equating the school to the "Jeff Bezos" of universities.

"That raises a lot of questions. If Harvard is so rich, why does it charge tuition to so many middle-income Americans? Why does it admit so few low-income students? Why doesn't it get bigger and produce more research with the money it has?"

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Despite the tax exemption, Harvard made $15.4 million in voluntary payments to the localities in fiscal 2023. However, Bloomberg estimates that tax exemptions saved Harvard $158 million on its property tax bills in Boston and Cambridge in 2023. Including other benefits, Harvard’s tax benefits totaled at least $465 million last year.

Harvard spokesperson Amy Kamosa defended the university’s tax-exempt status, citing the school’s mission and operations rooted in serving the public good. She also highlighted Harvard’s contributions to the community, including regular and consistent PILOT payments, paying municipal taxes on all non-exempt property, and working directly with the community through various programs and initiatives.

Why It Matters: This scrutiny comes after a series of events that have put Harvard in the spotlight. In December, Trump announced a campaign pledge to eliminate tax breaks for universities he considers leaning toward the left.

In February, Harvard lost a major donor, Citadel CEO Ken Griffin, who had contributed over $500 million to the university. Griffin withdrew his support due to controversy over Harvard’s response to the war in Gaza.

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Image by Joseph Williams via Flickr

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari