Monday, July 8, 2013
Princeton, New Jersey residents have filed a lawsuit against Princeton University claiming that the school is not eligible for tax-exempt status due to the school’s income from royalties and commercial ventures.
Princeton University is one of the wealthiest schools in the United States. While the average school’s fiscal endowment is somewhere around $313.2 million, Princeton’s is $16.9 billion. Last year alone Princeton University made $127 million dollars from patent licensing profits. Additionally, the school “has distributed $118.5 million in royalty profits to faculty since 2005.”
The fact that residents who share their hometown with nonprofits are often angered by a particular nonprofit organization’s tax-exempt status is definitely not unheard of. There have been several occasions where communities experiencing financial hardship have turned to local tax-exempt nonprofits and have asked them to contribute in ways the tax code doesn't require.
Princeton residents pay “at least one-third more in taxes” because of the school’s tax exemption. While Princeton University did pay $7.7 million in taxes last year, if not for its tax-exempt status the school’s annual property tax bill would be $28 million. However, the school also made a $2.48 million voluntary contribution.
What are the best arguments for Princeton residents? For Princeton University?