Your comparison is hugely unfair. The accounting nonsense for universities "paying" themselves for a PhD student's tuition is ridiculous but it's not classified as charity.

It’s also using make-believe numbers to get more money from someone else (donors and grant givers).

But there it actually makes sense - they are in fact teaching courses to graduate students, providing them with library access, etc. If a grant wants to support an extra grad student for a professor, it has to cover that stuff and calling that stuff 'tuition' is reasonable. It's only unreasonable to call it "income" for the student, which is a fiction that's inconsequential outside of the university itself (and the alternative universe where the tax change took place).

Let's compare it to what would happen if any other organisation did this.

Say, your employer demanding access to the tools you need for your job. That desk chair ? 20$/month. Computer ? 200$. Screen ? Another 30$.

That would be just peachy wouldn't it ? Oh wait. That's illegal by law.