A1 Business and Technical Universities Tax Exempt Status Discussion hiplease download the file down below and follow the directionsthank you>>>>>>>>>>>>>>>

A1 Business and Technical Universities Tax Exempt Status Discussion hiplease download the file down below and follow the directionsthank you>>>>>>>>>>>>>>>>>>>>>>>> We discussed in this chapter how the balanced scorecard identifies four categories of organizational
effectiveness criteria. Community-related measures of effectiveness, such as satisfaction with services or
benefits provided by a company, are one component of the internal business process category. This
challenge considers the issue of community-related effectiveness. Specifically, you will be asked to
consider the “good organizational citizen” category within the balanced scorecard.
Surely universities and colleges are good for society, but could they do better? Consider the issue of
federal income taxation.
“The vast majority of private and public universities and colleges are tax-exempt entities as defined by the
Internal Revenue Code . . . because of their educational purposes—that the Federal government has long
recognized as fundamental to fostering the productive and civic capacities of citizens.”
“Income for activities that are substantially related to the purpose of an institution’s tax exemption,
charitable contributions received, and investment income are not subject to federal income tax.”
Princeton University is New Jersey’s only Ivy League school. Its $22.7 billion endowment is the fourth
largest in the United States. Not only does Princeton not pay income taxes on investment income from
this endowment, but it also is exempt from property taxes.
Two dozen Princeton homeowners have filed a suit challenging the tax-exempt status of the school. If the
suit is successful, tax revenue from the university would climb to about $40 million a year, 264 percent
higher than what it currently is paying, according to Bruce Afran, the plaintiffs’ lawyer. That would reduce
homeowners’ tax payments by about 33 percent.
“The so-called benefits the university gives are not real economic benefits that help the average person,”
said Afran. New Jersey resident Leighton Newlin noted that the university “almost operates like a hedge
fund that conducts classes.”
The idea of challenging universities’ tax-exempt status is starting to spread. Not only is Congress looking
into it, but lawmakers in New Haven (CT) have proposed legislation to tax Yale University’s $25.6 billion
endowment.
The question for you to address is not the legality of the tax-exempt status of colleges and universities.
The issue is whether these institutions would provide enhanced value to the communities in which they
are located if they paid taxes on both investment income and property. Include your rationale within your
Discussion Forum response.
If you were a jurist evaluating the tax-exempt status of Princeton and Yale, how would you
vote?
1. I would continue to give universities tax-exempt status on both endowments and property
taxes. Universities most likely spend the tax-exempt money on scholarships, buildings,
and funding research. All these expenditures provide value to society, suggesting that
universities are good citizens.
2. I would vote for tax-exempt status on investment income for the same reasons noted
above, but not property taxes. Everyone else has to pay property taxes, and if colleges
and universities paid them too, the funds would directly help the members of the
surrounding community by reducing their tax burden. This is good citizenship.
3. I would both revoke the tax-exempt status of investment income and collect property taxes.
Being a good corporate citizen necessitates that these institutions pay taxes like
businesses and individuals do.
4. Invent other options.

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