Interesting article on Jewish ethical perspectives on taxation and charity compliance

December 01, 2009 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: Canadian Charity Law, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams

An article entitled Jewish Ethical Perspective to American Taxation by Kenneth H. Ryesky provides a Jewish law perspective on the US tax system.  Many of the points made here would be equally applicable to the Canadian tax and registered charity system.  It is a heavily footnoted and well written article. I like the conclusion “If practiced and applied properly, Jewish law has a very salutary effect upon taxation ethics and the welfare of the nation. But if Jewish children do not learn taxation ethics through the words and actions of their parents, teachers and rabbis, then they may well hear discourses on Jewish taxation ethics from Gentile judges in secular courtrooms.”

Here are some quotes from “Jewish Ethical Perspective to American Taxation”:

Jewish law, then, recognizes the need for a fair, just and objective scheme for imposing
taxes, and, under such a governmental taxation scheme, requires compliance with it. 16 Indeed,
the famous Talmudic dictum “dina d’malchutha dina” (“the law of the ruling government is the
law”) is specifically set forth in the context of the payment of customs duties imposed by the
secular governments.

...

Jewish law recognizes the need to finance governmental functions, and recognizes that
the secular governments underwrite the creation of various systems and infrastructures which
benefit the populace as a whole, including the Jewish community.13

....

Jewish law similarly requires the payment of taxes to legitimate taxation regimes, and
implicitly views legitimately assessed taxes as the property of the government.40 Failure to pay
legitimately imposed taxes, and/or smuggling in order to evade customs duties, are tantamount to
theft.41 Renown rabbis have taken a dim view of tax evasion among those in their communities.42
American courts have recognized that those who do not pay their tax obligations shift additional
tax burdens onto the tax-complying public,43 just as the Rabbis of the Talmud similarly
recognized more than a millennium previously.44

...

C. Jewish Ethical Norms:
In addition to obvious contravention of the basic Torah injunctions to be honest and
truthful,144 irregularities and lapses by tax practitioners can, inter alia, steal money which is
rightfully the property of the government, facilitate the entanglement of the taxpayer in illegal
behavior, and enhance the client’s risk of an audit if the taxation authorities become wise to the
practitioner’s modus operandi. Moreover, if indeed a tax practitioner is or becomes suspected of
the improprieties, the mere signature of the practitioner’s name on the tax return can, by subjecting
the taxpayer to an audit, effectively serve to inform upon the client to the taxation authorities. 145
American law places tremendous responsibility upon tax practitioners. Under Jewish law,
agents who act for others likewise must carry significant responsibilities to the principals on whose
behalf they act. 146 The Torah prohibitions against misleading and/or placing a stumbling block
in the path of a blind person 147 have long been understood in a far, far broader sense to forbid
the facilitation of another’s transgressions or straying into danger. 148 These prohibitions include
the giving of bad advice, and in such a spirit have been specifically recognized to apply in
today’s modern financial world to “advice given by the financial and advisory services of banks,
and by accountants, lawyers, and financial analysts.” 149

...

D. Tax-Exempt Organizations and the Jewish Practices of Charitable Giving:
The Hebrew word “tzedakah” has a far deeper and broader meaning than its common
English translation “charity.” The Hebrew root of “tzedakah” is “tzedek,” which means justice,
for Jewish law and practice equate giving to the less fortunate of society as a component of if not
synonymous with justice.188 The practice of giving money and other aid to those less fortunate
has always been deeply rooted in Jewish tradition and law, 189 and, is practiced very extensively
amongst almost all segments of the American Jewish population, even those who have strayed
far from the Jewish religious ritual practices. 190
Though the individual synagogues have long performed, and continue to perform, various
charitable works,191 organizations to augment the synagogue have appeared in America and
elsewhere.192 By one count, in 1909 there were in America seven national organizations; 809
relief societies; 148 hospitals, orphanages, convalescent homes and similar institutions; and 227
schools and other educational institutions specifically supported by the American Jewish
population.193 The number of Jewish tzedakah organizations in America has multiplied since
then.194
For the most part, these organizations (and any new ones which might appear in
contemporary times) took and continue to take advantage of the American tax laws by qualifying
as tax-exempt organizations.195 Indeed, one of the highest forms of tzedakah, bested only by
giving the charitable donee a job or a position as a coventurer in a business enterprise, is
anonymous aid where the identity of the donor and of the donee are unknown to one another. 196
A tax-exempt organization is a natural and logical vehicle for effecting such tzedakah.
Accordingly, the religious and secular ethical issues which are part and parcel of American
taxation pertain not only to the individual, but at the organizational level as well.

...

VII. CONCLUSION:
In the very first verse of Pirkei Avot, the rabbis enjoin the Jewish people to erect a fence
around the Torah,197 meaning to take stringencies in order to ensure adherence to the Torah’s
commandments.198 This has obvious implications to taxation ethics, if only in the avoidance of
involvement in schemes whose legality is ambiguous.
In the context of taxation systems based upon objective standards, such as those found in
the United States and most Western countries, Halacha requires that everyone comply with the
tax law in an honest and straightforward matter; any less is contrary to Jewish law as well as
national secular law.
Misbehavior in taxation and other financial matters by a Jewish person is viewed not only
as a personal transgression, but as a discredit to the Jewish people; a chillul HaShem (profanation
of the Name of G-d).199 The mere suspicion of rabbis, religious Jews and religious Jewish
institutions in publicized tax fraud cases200 is therefore something which should give the Jewish
community great pause. Even where there is no criminal conviction, or the conviction is
overturned on a technicality, 201 news media reports of religious Jews involved in ethical lapses
in tax matters is not in the Jewish community’s—nor society’s—best interests. And
disingenuous excuses such as the sentence mitigation argument advanced by a defense attorney
in a British courtroom that the cigarette smuggler defendants “were religiously observant young
men from a yeshivah” 202 only detract from the esteem in which the Jewish community is held, as
do lenity supplications citing the convicted tax cheat’s service to the religious Jewish
community.203 Individuals who are learned in Torah law should, if anything, know to comport
themselves far better.204
Religious leaders in the Jewish community need to make clear that tax fraud is inimical
to Jewish laws and values, and is unacceptable in the Jewish community.

....

If practiced and applied properly, Jewish law has a very salutary effect upon taxation
ethics and the welfare of the nation. But if Jewish children do not learn taxation ethics through
the words and actions of their parents, teachers and rabbis, then they may well hear discourses on
Jewish taxation ethics from Gentile judges in secular courtrooms.

 

The full article is at http://www.jlaw.com/Articles/JewishTaxEthic-art-jlaw.pdf

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