You seem to be selectively ignoring the portions of my comments that you don't wish to respond to, even when they directly answer the question you're repeatedly asking. Re-posting and adding emphasis:

There's the problematic assumption. As stated in my previous post, the public universities receiving taxpayer funds aren't paying taxes either. So the article compares universities paying no taxes and receiving no taxpayer funds with universities paying no taxes and receiving taxpayer funds.

(And the article also doesn't say anything about how such a policy change to non-profit tax law would tax the charitable foundations attached to existing taxpayer-funded universities as well, probably because that story doesn't play as well as targeting Harvard. Assuming those foundations don't get special-cased, because a law targeting only private universities plays better with voters, too.)

Separate from that, you could make an argument about the total amounts each university spends per student, or their efficiency, but that's not the argument the article makes. Instead, it presents an argument resting on the highly entitled assumption that all the money is there to be spent as decided by those making policy, without questioning or calling attention to that assumption.

That's exactly the kind of argument I'd expect from an outrage-driven medium, but not one I would give any credence to.

You're asking why people find that comparison "disturbing", but ignoring when people tell you that they find it disturbing because it demonstrates a position of entitlement.

The answer is that there's a difference between raising taxes and decreasing expenses, but since the former looks bad (especially when applied to a non-profit) and the latter looks good, the article spins it to look like the latter.

As for the rest of your argument:

> That has the same effect as subsidizing Harvard by the amount they would pay in taxes.

No, it doesn't. With accounting tricks, you might see it the same way on the balance sheet (though even then "lack of outbound payment" should look quite different from "inbound payment"). One might legitimately choose not to spend taxpayer money paying Harvard to educate students, or at the very least spend no more than the amount spent per student at taxpayer-funded institutions. (And we could have a separate argument about whether to spend that money and how much.) But that's not the decision to be made here; that's the decision policymakers might prefer to make, but not the one they have before them. Instead, the decision is whether to take away a university's non-profit status and tax money they earned for themselves to put it to another purpose. Or, in effect, to raise taxes on a particular class of non-profit institutions (from 0% to some non-zero amount).

And once properly framed as a question about taking away a university's non-profit status and thus raising their taxes, one could then ask why such a policy targets universities in particular rather than other non-profit institutions. Perhaps someone thinks money donated to the Red Cross or to cancer research would be better spent on government-provided healthcare? Step one, don't frame it as taking away the non-profit status of a charitable organization, spin it as that organization already generously getting a government tax subsidy that we'd like to decrease.

In both cases, the net result is that you're raising taxes, but making it look like you're decreasing expenses instead.