Zhang, Racial Integration and Tax Exemption

The Trump Administration is transforming American higher education. Among other fiscal levers, the President has threatened, and the Treasury Department is quietly considering, regulations that would revoke universities’ tax exemption for programs benefiting racial minorities. Commentators have decried such actions as an unprecedented assault. But relying on original archival research, this Article shows that the state has used tax exemption as a tool not to advance racial equality, but to stop its progress. It uncovers the fascinating story about a modern research university’s decision to sue the state to win the privilege of desegregation. This historical account provides lessons for both egalitarian advocates and policymakers. It yields two key insights: a fiscal refinement of the influential interest-convergence thesis, as well as the complex relationship among state, tax exemption, and racial equality.