<p>There are probably good historical reasons why Princeton and other private colleges have tax-exempt status. Colleges, like churches, are non-profit institutions whose work affects the quality of public life. Furthermore, like churches, they have been vulnerable to government meddling, including restrictions on freedom of thought and belief. So there is arguably some justification for protecting them from state authority (including the authority to levy onerous taxes). </p>
<p>As for government research funding, if Princeton is getting more research money than other NJ institutions, it may be because its professors are submitting more (and better) responses to federal requests for proposals (RFPs).</p>