The Internal Revenue Service's proposed rule, unveiled September 3, would strip tax-exempt status—and with it, charitable deductions, foundation grants, and often state tax breaks—from any private school that operates a race-conscious program, regardless of its purpose. The agency estimates that 18,000 institutions and 750,000 students would be affected.
Philip Hackney, a law professor at the University of Pittsburgh and a former IRS attorney, argues that the proposal is not enforcement but a power grab that should alarm everyone, regardless of their stance on affirmative action. "It is a power grab that should alarm everyone, regardless of where you stand on affirmative action," he said.
The deeper issue, Hackney contends, is not the impact on private schools but the precedent it sets. The IRS is claiming the authority to take a Supreme Court precedent, declare it national policy, and impose it through the tax code on private actors that the Court's decision does not reach. This, he says, is not enforcement of existing law but the creation of new legislative and executive power that neither the Court nor Congress has authorized.
Hackney points to the 1983 Supreme Court case Bob Jones University v. United States, which upheld the IRS's revocation of tax exemption from a university that practiced racial segregation. That case is the legal foundation for the current regulations, but it also exposes their fatal flaw. The Court in Bob Jones did not grant the IRS open-ended power to define national policy. It authorized the IRS in that specific case because all three branches of government had converged on the prohibition of racial segregation over decades, including the Civil Rights Acts, Brown v. Board of Education, and presidential enforcement of desegregation.
Justice Lewis Powell wrote separately in Bob Jones to warn that without deep democratic agreement, the IRS could become a weapon aimed at ideological opponents. Hackney argues that today's convergence runs the other way. Congress has never legislated against race-conscious remediation, and the IRS itself has protected minority-favoring scholarship and admissions programs for over 50 years. The administration is not implementing a democratic consensus but claiming the power to create one by decree.
The administration's legal theory rests on Students for Fair Admissions (2023), which struck down race-conscious admissions at Harvard and the University of North Carolina. But that decision was based on the 14th Amendment's equal protection clause and Title VI of the Civil Rights Act, which apply to government actors and recipients of federal funding. The Court was not declaring a new national policy binding on every private school but resolving a specific dispute about specific programs at specific institutions.
The IRS does not explain how a constitutional holding about university admissions becomes a tax exemption standard for every private school. It has simply asserted it. The stakes extend beyond the institutions currently under attack. Every tax-exempt organization in America—universities, hospitals, foundations, advocacy groups, churches—now operates in an environment where the executive branch claims the power to define fundamental public policy through the tax code based on judicial decisions it selects.
Institutions whose entire mission is remedying the effects of historical discrimination face the particular cruelty of having that mission turned against them by the very legal doctrine designed to protect it. Hackney warns that whatever one thinks of affirmative action, the theory could be used by future administrations against other targets. "Ask yourself what a future administration might do with the same theory," he said. "The answer should worry everyone."
Hackney calls for the regulations to be withdrawn. If the administration believes Students for Fair Admissions requires this result, it should go to Congress and make that argument. Congress can act and be held accountable. IRS rulemaking cannot. The courts should reject this assertion of new power dressed as a legal obligation.
