Column | Dec. 11

Keep Princeton tax exempt

Benjamin Franklin once said, “If you would not be forgotten as soon as you are dead, either write something worth reading or do something worth writing.” Allocating $120,000 in her will to sue “corrupt” educational institutions, it seems that Eleanor Lewis took his advice seriously.

Ms. Lewis, who passed away recently, asked in her will that the money she left behind be used to fund a lawsuit against Princeton University on the claim that it is a corrupt institution. Granted that sometimes the words “privileged,” “detached” and even “elitist” may come to mind when one thinks of Princeton; “corrupt,” however, definitely raises a few eyebrows. Yet her premise does not seem so far-fetched.

While the whole lawsuit is varied and complex, addressing multiple issues including the usage of University buildings for supposedly “commercial” purposes, the basic premise is that the school is a for-profit institution and thus does not deserve tax-exempt status. In particular, the lawsuit targets the University’s patent royalty sharing policy. In the past decade alone, Princeton has received over $524 million from a patent on Alimta, an effective drug invented by Princeton professor Edward Taylor in 2004, used for treating certain types of lung cancer.

With such a large amount of profit, it is easy to see why local residents would think it’s fair that the University shoulder more of the local tax burden. The plaintiffs of the case argue that they allegedly pay “at least one-third more in taxes” as a result of the school’s current tax exemptions. They are not claiming that the University isn’t entitled to a part of the cuts. After all, the school provided the facilities, backing and materials needed for such research to be conducted in the first place.

The real question is whether or not this money should be taxed. As plaintiff attorney Bruce Afran argues, “If they wanted to act like a traditional university, they would put the patent into the public domain and let everyone benefit from it equally.” If not, he adds, the University should register as “a commercial entity and need to pay their taxes like any other commercial entity.”

When dealing with the town-gown relationship, questions naturally arise over whether Princeton’s educational purpose warrants the burdens placed on local taxpayers through tax exemptions. Expanding this to say that tax exemptions can be justified on grounds of being innovative or trying to benefit human health and society appears to set a dangerously ambiguous precedent.

In response to criticisms, the University cites the Bayh-Dole Act, which allows universities to own patents on intellectual property. However, I think the patent system can be justified on more than just legal grounds. The money is linked to the University’s ability to provide quality education.

Although Princeton does make a lot of money, it is important to keep in mind that the University is not aimlessly working toward good, but rather is a societal institution aiming to educate. It is undoubtedly a state interest to have an educated citizenry, and universities play a crucial role in fulfilling that need. The plaintiffs argue, however, that this aim has been tainted through the profits Princeton has made off of patent royalties.

It would seem that Princeton is not prioritizing its money properly, citing increases in faculty salaries. Yet, this money also goes toward other ends. The most direct effect is Princeton’s generous financial aid program, which helps many who could not otherwise pay the school’s costly tuition. The average financial aid award for the Class of 2017 was almost $42,000. With a class size of 1,291 students, the University spends about $54,220,000 on freshmen alone. The money spent to help eliminate financial hurdles that might otherwise prevent middle- and lower-class students from attending is undoubtedly a worthy use of the school’s resources and seems to fit its mission of education.

Princeton should strive to assist those who want to attend the school but are not able to due to financial circumstances beyond their control. After all, is it really a student’s fault that his parents do not have the funds to send him on their own? Pouring resources into making education affordable for all definitely fits under the University’s educational mission.

While Princeton is able to pay for some of its financial aid through alumni contributions and federal aid, it cannot rely on outside help to carry such a burden. It is through patent royalties, which on face seem profit-seeking, that allow the University to create an educated public that is more determined by merit than class. Granted, the University should perhaps spend more of the money it receives through royalties to accomplish this goal and less on other ends, and its admission process is not flawless in terms of acquiring a perfect representation of the American public by class in its student bodies. However, this is no reason to tax the University if it is at least working toward this worthy goal.

Benjamin Dinovelli is a sophomore from Mystic, Conn. He can be reached at bjd5@princeton.edu.

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