The Ethics of Tax Evasion:
A Jewish Perspective
Gordon Cohn, Ph.D.
Assistant Professor of Accounting
Department of Economics
Brooklyn College of the City University of New York
(Forthcoming in Journal of Accounting, Ethicsand Public Policy)

This paper presents the Orthodox Jewish view regarding the obligation to pay taxes. This paper is meant to provide a philosophical approach to the obligations to pay taxes, not a practical guide as to under what conditions one is required to pay. Due, to the complexity of the subject, it is impossible to include all relevant information in this article. If after reading this document the reader has questions whether he is obligated to pay taxes, he is advised to consult a knowledgeable Rabbi who can ascertain his obligation.

The opinions which are presented herein are based on the Orthodox Jewish approach. This approach defines the obligation of Jewish persons according the oral tradition. The oral tradition consists of Rabbinic teachings from when the Torah was given (around 3300 years ago) until today. The main source of the oral tradition is the Talmud. The Talmud, is the compilation of Jewish oral law. It explains the meanings behind the Torah's verses. According to the Jewish tradition the Torah cannot be properly understood without examining Talmudic interpretations. The Talmud consists of the Mishna and Gemara. The Mishna was compiled and edited approximately 1800 years ago. The Gemara was written a few hundred years later. It focuses on presenting commentaries on the Mishna. Since the compilation of the Talmud, Rabbis have used it to develop a system of laws which are compatible with the complexities of modern times. Two of the most important post-Talmudic Rabbinical works are those by Maimonides (Egypt, 1135-1204) and the Schulchan Aruch [Joseph Caro (Safed, 1488-1575)]. The volumes by these authors are important. They codify and simplify the more complex Talmud. The Schulchan Aruch is considered a fundamental text and is referred to as The Code of Jewish Laws. An important commentary that appears with the Schulchan Aruch is by the Rama [Rabbi Moshe Isserles (1530-1572)]. According to Jewish tradition people whose ancestry is from the Northern European countries follow the opinion of the Rama. Alternatively, those who lived in Mediterranean counties went after the view of the Schulchan Aruch. Unless noted otherwise, for simplification, whenever this paper refers to a Jewish person it means one who follows Orthodox tradition.

The Jewish Philosophy Behind Paying Taxes

An Orthodox Jewish person is preoccupied with obeying laws. From the beginning to end of his day, his every move is regimented. The Rabbis prescribe which shoe should be put on first, what side to sleep on in the bed, the proper posture when walking in the street, etc. These laws of everyday conduct are in addition to a multitude focusing on frequently performed religious rituals. Thus, obeying laws regarding payment of taxes is merely one of the many laws which a Jewish person accustoms himself to follow.

Adherence to tax laws has a different flavor for the Jewish person than for the general population. First, as will be discussed in the next section, Jewish law requires an individual to listen to the government and to pay taxes. Thus, when a Jewish person pays taxes he is not only discharging his secular responsibility, but also fulfilling a religious obligation. Second, the Mishna in Ethics of our Fathers (1) (4:21) (the classic collection of Jewish ethical statements) says that this world is similar to a corridor before the next world. The same Mishna also advises that one should fix himself up in this world in order that he should be ready for the next world one. In other words, the Mishna advises that a Jewish person is not supposed to consider this world as his 'true' home, rather it is only a place of preparation for one's future dwelling.

Therefore, based on the above, a Jewish person's principal reason for keeping the tax laws is not only because he is afraid of punitive action. Rather an effort to diligently follow the tax laws gives him a larger share in the next world. Paying taxes helps one gain more eternity in the same way as keeping laws of Kashrus or praying the required three times a day.

When a person adopts the afore mentioned attitude toward paying taxes, he is no longer a citizen who the government must scrutinize in order to insure tax law compliance. Rather, he independently wants to make sure that he pays what is required. A story regarding Rabbi Yaakov Kamenetsky captures the spirit which the Jewish person is supposed to have regarding paying taxes. Rabbi Kamenetsky was one of the most prominent Rabbis in America until his passing away in 1985. Once an appreciative congregant gave Rabbi Kamenetsky a silver kiddish cup for a present. Subsequently, it was discovered that Rabbi Kamenetsky took this cup to a silver smith for appraisal. It seemed unusual that such a distinguished person receives a gift and was preoccupied with determining its value. However, later was discovered Rabbi Kamenetsky's true intention in seeking the appraisal. The cup was received for performing Rabbinical services, therefore, Rabbi Kamenetsky decided that its value was taxable income. Rabbi Kamenetsky's diligence must be attributed to his giving intrinsic value to paying taxes. Fear of Internal Revenue Service citations could not motivate such extraordinary dedication.

Finally, two Talmudic statements explain why a Jewish person would want to give a high priority to fulfilling his tax obligation despite its steep cost. A principal reason for a person not paying taxes is that he wants to amass as much money as possible. He sees happiness as a function of having more wealth. However, in Ethics of our Fathers (4:1) it is explained that a rich person is not someone who has accumulated large amounts of wealth, rather it is someone who is happy with what he has. An individual who contemplates this Mishna will be less likely to shrug his civic obligation in order to acquire more wealth. He realizes that allowing himself to remain with the personal quality of greed, a common motivation for tax evasion, can be more detrimental to his well being than forfeiting the money necessary to fulfill his tax obligation.

Furthermore, in Tractate Shabbos (31a) is discussed the questions which are asked on the day of judgement. The first inquiry is, was one ethical in his business dealings? This question precedes inquiries regarding performing good deeds and ritually based commandments. A person who uses unscrupulous tactics to avoid paying taxes, in the final calculations will immediately be held responsible for not giving the government the portion which they are entitled to from his business dealings. The passage informs one that even if he has not been called for a review by the IRS, in the end he will still to have his records examined. A person who studies the afore mentioned Talmudic passage before filling out their income tax form will reconsider making illegal deductions and not reporting income.

Halachik Perspective on Paying Taxes

The Halachik (Jewish legal) perspective on paying taxes has four components. First, there are laws related to a citizen's duty to follow his country's statutes. This is called dina damalchusa dina. Second, laws discuss the prohibition of lying. Third, it is forbidden for a Jewish person to do anything which could discredit the religion. This is known as chillul Hashem. Finally, since it is essential for a Jewish person to perform the maximum number of mitzvos (commandments and good deeds), he is required to refrain from any activity which could result in his being confined in a place where he cannot properly practice Judaism. For example, he should try to stay out of jail.

Dina Damalchusa Dina

Dina damalchusa dina literally means that one is required to keep the laws which the king has established. This principle provides the basis for a Jew's Halachik requirement to follow the country's laws. It appears in several places in the Talmud [Tractates Baba Kamma (113a), Nadorim (28a), Gittin (10b) and Baba Basra (25a]) and also in the Choshen Mishpat section of the Code of Jewish Laws chapter 369.

As with many Halachos, there are disagreements among Rabbis when dina damalchusa dina applies. However, generally speaking, the Schulchan Aruch and the Rama are relied upon to resolve the disputes and present the final opinion which one must follow. This section discusses the disagreement in opinions regarding dina damalchusa dina and presents the final conclusion. Through examining a variety of opinions the reader will gain greater insight into issues related to the requirement to follow their country's tax laws. Unless otherwise noted, all opinions appear in either the Schulchan Aruch or the Rama in the Choshen Mishpat section of the Code of Jewish Laws chapter 369.

There are three principal reasons for dina damalchusa dina. First, it can be claimed the king owns the country and therefore everyone is required to give him a portion of her income. The payment is a type of rent. Second, a country can be considered as a type of partnership or corporation. The king or president is the organizational leader. Third, according to the Torah the sons of Noah were assigned seven laws to follow. One of these laws is that each nation should establish a government which provides for the welfare of its citizens.

The first reason is that the king is considered the owner of the entire country. Thus, he is entitled to receive rent from all inhabitants. According to this reason there is a question whether dina damalchusa dina applies only to laws related to land. Since all the land belongs to the king he is entitled to rent for their use. However, according to this view the king owns the land and nothing else. Therefore, he has no right to income which is not dependent on land. On the other hand, some opinions hold that not only does the land belong to the king, but the people are also considered his property. Therefore, the people must also give the king a portion of their labor. The fact that a ruler has a right to force people to work or draft them into the army is an indication that their labor is owned by the king. The Rama concludes that dina damalchusa dina applies even to laws which are not related to land.

Alternatively, if a king forces himself onto the people and the people do not accept him, there is no law of dina damalchusa dina. Rather, dina damalchusa dina applies only when there is a legitimate monarch or leader. Thus, for example, in Cuba or Eastern European countries which were invaded by Russia, the governments were kept in power by brute force and there would not be a rule of dina damalchusa dina. Thus, in these cases where the king or leader is not legitimate, dina damalchusa dina is not a reason to forbid tax evasion.

The reason for dina damalchusa dina which was described above applies only to a monarch. However, the next two reasons for dina damalchusa dina are also relevant to democracies. Maimonides in the Laws of Stealing (5:8) describes the quality one must have to be considered a legitimate ruler and for dina damalchusa dina to be applicable. He says that people should agree that a person is their ruler and they see themselves as servants to him. From Maimonides and similar writings commentaries claim that whenever a populace elects a government and they agree to its laws dina damalchusa dina applies. Thus, in a country such as the United States there should be a rule of dina damalchusa dina. This is due to the apparent agreement among the populace that they will follow the decisions of their elected officials.

According to this last reason, dina damalchusa dina can be thought of as similar to rules which are enforced by a partnership. When people join a partnership, they implicitly agree to go along with all rules which are made by the ruling body. If someone feels that he cannot abide by the partnership's rulings he is expected to withdraw. Similarly, everyone in a democracy implicitly agrees to abide by the government's decisions. One who is not satisfied with the tax system for example is expected to concede and pay her obligation or move to a different country. Continuing to live in a country indicates an implicit agreement to abide by its rules. If one does not pay they violated this implicit agreement.

The third and final legitimacy of dina damalchusa dina to be discussed here is based on the laws which were given to Noah. These laws are discussed in Tractate Sanhedrin (56b). According to the Jewish tradition these laws provide the guiding moral principles which non-Jews are expected to follow. One of the laws is the requirement for each state to convey statutes which provide for the welfare of its people. Included in this category of laws are those which are related to taxes. Thus, since the Torah requires the nations of the world to set up a tax system, Jewish people are also expected to obey these laws.

The reason for dina damalchusa dina which is based on the monarch owning all land has stronger implications than the other two reasons. Maimonides [Laws of Stealing (5:11)] says that one who does not pay taxes violates the Biblical prohibition of stealing [Leviticus (19:11)]. Thus, when tax evasion transgresses this important prohibition it becomes a more serious offense. The commentaries explain that Maimonides conclusion is only consistent when the king owning all the land is the reason for dina damalchusa dina. According to this rationale if a person does not give the king a portion of the crop he is not paying the rent which is rightfully the king's. Thus, he is stealing from the king. He is holding onto the king's rent money. However, if dina damalchusa dina is due only to there being a law that one must pay taxes, but the country has no intrinsic ownership of its citizens' income, if one does not pay taxes, he has violated a law, but has not transgressed the stealing prohibition.

Besides the reason of an illegitimate ruler which was discussed earlier, the Schulchan Aruch addresses another justification for not having to follow the government's tax statutes. It says that taxes have to be paid only if there is a fair tax system. For example there is a set scale regarding how much people have to pay. Alternatively, deciding each individual's tax burden separately is not within the rights of a government. Under this circumstance the dina damalchusa dina rule does not require paying taxes.

Finally, the Rama discusses another government practice for which there are mixed opinions whether it is considered legitimate. Suppose the government decides to give a special excise tax to one group of people or to one particular profession. For example, if all Jews or all Italians or all people living in Alabama have to pay more federal income tax. The Rama says that according to one opinion such a tax system is considered unfair and dina damalchusa dina does not apply. However, he concludes that since the discrimination is against a whole group of people rather than particular individuals, the government is permitted to do it and dina damalchusa dina does apply.

Prohibitions Regarding Lying

The Torah gives a stronger warning about lying than other sins. It says "keep a distance from speaking false" [Exodus (23:7)]. The Torah not only prohibits lying, but it warns than a person should not say anything that would be close to lying. Stay away from it. Maimonides [laws of the Sanhedrin (21:10)] gives an example of what is meant by keeping away from lying. He says that a judge must be careful to not even smile at one of the litigants. Such behavior can cause the second litigant to conclude that the judge looks more favorably to the first litigant. As a result, the second litigant will make less effort to fully present his position. Consequently a false din could result. Thus, although the judge smiling at one litigant in itself is not a falsehood, it is still forbidden. The verse warns that one must keep away from anything that could come to a falsehood. Smiling at one litigant is considered in this category.

Even though the verse from Exodus which was mentioned above refers to speaking, there are several places in the Talmud which indicate that writing a falsehood is also a violation of the Biblical warning [Baba Basra (172a), Gittin (26b), and Sanhedrin (30a)]. Based on these sources one who evades taxes by signing a falsified tax form has violated the stay away from falsehood warning.

Furthermore, there is disagreement among Rabbinical sources if dina damalchusa dina is a law which derives from the Torah or is only a decree made by Rabbis of later generations. If it is only a decree, then it is a less serious offense. However, since submitting a falsified tax statement involves lying, this form of tax evasion is definitely violating a Biblical prohibition and is automatically considered a more serious offense.

However, it should be noted that according to Jewish Law if for example, a merchant tells a customer that he does not have to pay sales tax if he pays in cash, the purchaser is committing a less serious offence than by not paying his full share of income taxes. As we just mentioned, when one does not pay income taxes he is over at least one and possibility two Biblical prohibitions. However, when one does not pay sales tax he has perhaps violated no Biblical transgression. This is because lying is not necessary in order to avoid paying sales tax.

Finally, the reader should realize that Jewish Law considers the prohibition of lying as only a relative iniquity. This means that under certain conditions one is allowed to lie in order to prevent a larger injustice from being perpetrated. For example, in regards to taxes, a person is allowed to lie regarding her income to an illegal government. Under this circumstance she is not considered to have violated the Biblical prohibition of keeping away from falsehoods. Evidence that lying is permitted under this circumstance is found in Tractate Nadorim (62b). There is described how a Rabbi allows a congregant to say that he was a servant of a priest in order to avoid paying a tax which the government did not have a right to collect.

However, even though lying is sometimes permitted in order to circumvent an injustice, one is never allowed to swear falsely or give false testimony in court [Shavous (31a)]. Furthermore, since it can be difficult to differentiate when lying is permitted and when it is forbidden some Rabbis suggest that only someone who is very learned in Jewish Law should be permitted to lie. They say that if less learned individuals are allowed to lie they might wrongly infer that lying is permitted in other situations where it is actually forbidden.

Chillul Hashem

In Tractate Yuma (86a) is discussed how chillul Hashem is considered from the most reprehensible of all transgressions. Chillul Hashem has two meanings. First, it refers to any action which makes people look down at the Jewish religion. For example, if someone who is a Torah scholar and keeps all rituals is convicted of stealing money this is a chillul Hashem. It makes people think that following the Torah does not lead one to become a more ethical person.

Second, chillul Hashem is when people see a distinguished person doing a transgression causes them to be willing to perform similar transgressions. For example, if a distinguished Rabbi is seen eating in a McDonalds restaurant, other Jewish people might infer that they do not have to be careful about Kashrus.

The Talmud discusses that a person can violate chillul Hashem even by doing something that is permissible. For example, it says that a chillul Hashem is a distinguished Torah scholar buying on credit and people becoming suspicious if he actually paid his bill. Causing people to talk about a Torah scholar is called a chillul Hashem even if the bill was actually paid immediately and the gossip had no substance. Similarly, if the Rabbi mentioned above only eat a coke and apple at McDonalds, items which are allowed, his action may still not look proper. Onlookers may not realize what he is eating or they may think if the Rabbi had a coke they can have a non-kosher hamburger. For this Rabbi to eat at McDonalds is called a chillul Hashem even though he violated no specific transgression. Furthermore, as people assume more respected positions they must be more careful regarding their actions. When someone is more distinguished the public is more likely to observe, talk about and learn from their actions.

This section presented another transgression that can be violated by a person who evades paying taxes. As mentioned, the Talmud considers chillul Hashem to be one of the most serious violations. Even if there is type of tax evasion which did not require lying and did not violate dina damalchusa dina, if it could come to chillul Hashem it would not be allowed. Alternatively, it a tax evasion is a violation of din damalchusa dina and necessitates lying and can also come to chillul Hashem if it is revealed, it is considered an extremely serious offense.

While chillul Hashem has it basis in the Talmud, and technically applies only to the Jewish religion, it is a general concept which can have ramifications for many types of people. Elected officials for example, should be overly careful that all of their actions appear ethical. The discovery that public officials are involved in scandals or have not practiced exemplary behavior can cause citizens to lose respect for them. As a result it is more difficult for them to govern. Furthermore, if the public sees that elected officials appear to not pay proper respect for the laws they are more likely to become lax. If for example, it is discovered that an elected official paid no taxes one year, citizens could be more willing to not report all their income or do other illegal manipulations to avoid paying taxes. This could be the case even if the elected official publically justifies his not
paying taxes.

The Importance of Keeping Out of Jail

Even if there would not be any of the above problems regarding paying taxes, it is important for a Jewish person to pay taxes in order that he should not have to go to jail. For example, suppose a person is living in a society where there is an illegitimate dictatorship none of the afore mentioned reasons for paying taxes would apply. However, one should still pay taxes in order to avoid going to jail. Being in jail has two major drawbacks for a Jewish person. First, there are many mitzvos which cannot be performed there. For example, there may not be kosher food, a synagogue, Torah study, etc. Second, the fellow prisoners will not be the types of individuals who will encourage one to have a proper Jewish attitude.

Many Talmudic passages could be used to support the importance of a Jewish person staying out of jail. Two of them follow. In Ethics of our Fathers (2:10) is discussed how one of the most important qualities which a person should aim for is to have good neighbors. In another Mishna (6:9) Rebbie Yossie Ben Kisma is offered tremendous wealth in order to move to a city where there would be no Torah learning. Rebbie Yossie replies that even if he is offered all the wealth in the world he would not live in a city without Torah. From these two Mishnias is seen the importance one must place on living among good people where it is possible to learn Torah. A jail does not provide these conditions. Thus, a Jewish person must take great strides to insure that he does not end up in a jail with bad company, no Torah study, and an inadequate opportunity to perform mitzvos. Thus, in order to stay out of jail, a Jewish person can have a requirement to pay taxes even to an illegitimate government.


This article has shown that there are several reasons based on Jewish Law why a Jewish person should not be a tax evader. The reasons include dina damalchusa dina, prohibitions regarding lying, chillul Hashem and the importance of staying out of jail. Probably, several other reasons could also be found.

In Leviticus (19:2) the Jewish people are commanded to be a holy nation. Furthermore, in verse (22:32) there is a commandment for the Jewish people to sanctify Hashem's name. These mitzvos are the opposite of chillul Hashem. The Torah teaches that the Jewish people have a special mission of bringing morality into the world. Through a Jewish person attempting to strictly follow his nation's laws, staying a way from falsehoods, and making sure that all his actions are a credit for the Jewish people he fulfils the mitzvah of making Hashem's name great. People then see that being an Orthodox Jew is more than just practicing many ritualistic mitzvos. Tax evasion is frequently performed only because a person wants to hold on to his wealth. When a Jewish person is convicted of this transgression it causes the populace to lose respect for Judaism. Even if ethical or technical leniencies can be found which would make tax evasion permissible, the damage to the image of Judaism which can result if ones actions become public requires every Jewish person to make substantive efforts to refrain from controversial activities.

1. The work appears in most standard prayer books.

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