The Trump administration has moved to bring the tax code into its campaign against diversity programs and the consideration of race in education, opening a new front that could affect how schools and cultural institutions operate.

At the center of the effort is a proposal to strip tax-exempt status from schools that factor race into their policies. Tax exemption is a foundational benefit for educational institutions, freeing them from federal income tax and allowing donors to deduct their gifts. Losing it would carry significant financial consequences.

The administration has framed the move as an extension of its broader push against diversity, equity and inclusion programs, often referred to as DEI.

The proposal drew a sharp response from within higher education. Michael Roth, the president of Wesleyan University, called the plan an "extraordinary overreach," warning that using the tax code in this way would give the federal government broad leverage over the internal decisions of independent institutions. Critics of the effort say it could expose colleges and universities to financial pressure over a range of programs and admissions practices.

The administration's campaign extends beyond schools. Officials have also threatened to cut federal support to the Smithsonian Institution, citing what they described as "ideological activism" and ideological bias in its work. The Smithsonian, a network of museums and research centers, receives a substantial share of its funding from the federal government.

Together, the two initiatives involve using federal money and tax benefits in decisions affecting how educational and cultural institutions handle questions of race, history and identity.

The practical effects remain uncertain. Any change to tax-exempt status would likely face legal challenges, and the process of altering IRS standards is neither quick nor simple. The measures affecting the Smithsonian would depend on decisions about appropriations and federal support that involve Congress as well as the executive branch.

For now, schools, universities and cultural institutions are weighing how to respond to a set of proposals that could carry lasting financial and operational consequences, and that touch on how they teach, admit students and present the nation's history.

References

1. 1.News reporting — administration proposal to tie tax-exempt status to schools' race-related policies
2. 2.News reporting — Michael Roth (Wesleyan University president) 'extraordinary overreach' quote
3. 3.News reporting — administration threats to cut Smithsonian federal support and 'ideological activism' characterization
4. 4.IRS/tax code background — nature and financial significance of tax-exempt status for educational institutions