Is It Time for Colleges to Start Paying Taxes?

"As cities and towns struggle to pay for public services, it's hard to blame public officials and taxpayers for wondering why well-off educational institutions aren't sharing the load for police and fire departments, sanitation and road maintenance," write Piereson and Schaefer. "The reason they don't dates to 1917, when Congress decided that educational institutions, which then operated on a far more modest scale, should be exempt from federal income taxes."

"In the intervening decades, some schools like Johns Hopkins, Yale and Duke have worked out Pilot (payment in lieu of taxes) programs with cities or towns," they add. "But these donations fall well below what the universities would owe in taxes." 

In lieu of Pilot deals, which are "often secretive and contentious", the authors suggest "it's time to treat universities like for-profit enterprises."