Nonprofit universities reap overlooked property and income tax exemptions on huge real estate holdings

Evidence

If a college is spending $92,000 per student, you might ask, why does it have so much left to invest? Here, again, we see how one tax break combines with another to yield huge returns. Nonprofit institutions—which, you’ll remember, include both public and private four-year colleges—enjoy tax breaks in the form of federal income tax exemption, and typically state and local income and property tax exemptions, too. Universities often own significant real estate, which makes this exemption extremely valuable. In New Haven, Connecticut, for example, an estimated 60 percent of city property was tax-exempt in 2020; of that 60 percent, Yale University, a top-of-the-pyramid school, owned 40 percent of the exempt property. It’s a benefit with far-reaching effects across all of higher education, and it’s probably the least-discussed benefit out there. (A Congressional Research Service analysis of tax benefits for higher education never mentions it.) — Dorothy A. Brown, The Whiteness of Wealth, 266

Categorization

• SHARE: Yale owning 40 percent of a 60 percent tax-exempt New Haven is a specific stat for someone into higher-ed finance or urban policy.
• DEFINE: Establishes the concrete mechanism: nonprofit status yields multiple stacked tax exemptions the text previously introduced recursively.