What if one feels these loopholes are against the spirit of the law
(even as they are in keeping with the letter of the law)?
We are halachically obligated to follow the laws of the land under the principle of “dina d’malchuta dina” (Bava Kamma 113a; Nedarim 28a). This obligation requires adherence to civil laws, including tax laws, as long as they are applied fairly and do not discriminate against Jews or other minorities. If a tax law were discriminatory, such as one unfairly targeting Jews, halacha would not require compliance, as our tradition does not support unjust treatment (Shulchan Aruch, Choshen Mishpat 369:8). However, U.S. tax laws are applied uniformly, regardless of race, religion, or background. Therefore, there is a halachic obligation to pay taxes within this equitable framework.
From a halachic and ethical perspective, it is appropriate to use legal methods to reduce tax obligations. If the government considers a certain tax deduction or credit inappropriate, it has the authority to amend or eliminate it. Many tax provisions exist specifically to promote beneficial behaviors, such as charitable giving, homeownership, or investing in retirement, so using these incentives aligns with the intended purpose of the tax system. Just as we are obligated to pay taxes we owe, we also have the right to utilize lawful options to minimize our tax liabilities.
Halacha acknowledges a person’s right to protect and retain their resources. The funds one has are ultimately gifts from G-d (Devarim 8:17-18), entrusted for wise use, which includes both meeting obligations like taxes and fulfilling mitzvot, such as tzedakah. However, halacha does not mandate that a person forgo legitimate opportunities to reduce tax liability. Instead, a person is encouraged to manage resources responsibly, balancing obligations to the state with the religious values of tzedakah and community support. By using available tax incentives, one can fulfill civic duties while retaining resources to fulfill personal and religious responsibilities.
– Rabbi Jonathan Muskat is the rabbi of the Young Israel of Oceanside, a rebbe at Shulamith High School, and a pastoral health care liaison at Mount Sinai South Nassau.
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Answer: What are “legal” loopholes? Are there “illegal” loopholes? The answer, especially as regards taxes – a good citizen’s obligation to support the ongoing function of the government to provide the citizenry with needed services – would seem to be that where there is no clear ambiguity in the application of tax law such that one skirting the taxes would be liable to stealing from the government.
On the other hand, tax law in most democratic countries is very complex and there are specific ambiguities that an expert certified accountant will be able to search out in the course of preparing either individual or business taxes or other government obligations.
The founding fathers of this great republic were men of belief in G-d and as such they included in the tax code a charitable exemption in order to promote a better society. Thus giving to charity is not a loophole.
Here’s an example of a loophole – legal: Until a number of years ago a younger spouse was able to claim half of a spouse’s Social Security benefits where that spouse, though having reached full retirement age, decided to wait to collect Social Security payments. It was a legal loophole and many did take advantage of it. The government caught it and changed the law and closed that loophole.
Now, we have the story of the Chafetz Chayyim who was meticulous to never use an un-canceled postage stamp for he considered that to be theft of services.
In truth the government at all levels levies so many different taxes: local sales taxes, real estate taxes, estate taxes, capital gains taxes, federal excise taxes, highway tolls. These according to many help maintain many of the government services. It is clear that if one tries to find ways not to pay any of these taxes, our sages, such as the Chafetz Chaim, would look upon with great disapproval.
We are loyal citizens of the land of our sojourn; especially where it is a Malchus Shel Chesed we need to properly contribute to the needs of our fellow citizens.
– Rabbi Yaakov Klass is chairman of the Presidium of the Rabbinical Alliance of America; rav of Congregation K’hal Bnei Matisyahu in Flatbush, Brooklyn; and Torah editor of The Jewish Press. He can be contacted at [email protected] and [email protected].
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This question conflates two very distinct systems, a halachic system and a dina d’malchusa system. When it comes to halacha, we understand that G-d is the ultimate arbiter of ethics and morality, and everything within the Torah is right, good, just and proper. Therefore, there are many situations where even though according to the letter of the law, one would be allowed to do x, y, or z, nevertheless it is not within the spirit of the law and therefore it is improper.
However, when dealing with paying taxes, this is far more of a contractual basis. We live in a land and we are the beneficiaries of tremendous blessings of being in a free country. Part of the requirements of being a citizen of this country is being a responsible citizen, which includes paying taxes. Taxes are dictated by law and the law is specific and exact. Therefore, if one is obligated to pay taxes, he is obligated to pay taxes; if he is not obligated to pay taxes, he is not obligated to pay taxes. There is certainly no concept of going lifnei mishuras hadin or beyond the letter or even the spirit of the law. One is obligated to follow what the law is.
My rebbe, Rabbi Henoch Leibowitz, zt”l, would often use this as an analogy: if you were standing in front of a judge and you explain to him what your logic was for taking this as a tax break, what would the judge’s reaction be? If the judge’s reaction would be “clever, we never thought of that, but it is within the letter of the law,” then absolutely it is proper and can be done. However, if the judge would make a face and say, “You scoundrel, that’s not what the law says and you are just devious,” then do not do it.
Point being, there is very exact letter of the law, and one is obligated to follow it. If there is a legal loophole which would stand up in court, and can be explained as fitting in the law, then 100% a person should take it, and anyone who doesn’t is paying taxes out of his own pocket and has no guarantee he is going to get that money back; he is throwing money away. However, if that loophole is not legal, then it would constitute going well beyond what you should do; you should pay those taxes, and not paying would be wrong and improper.
– Rabbi Ben Zion Shafier is founder of The Shmuz and author of 10 Really Dumb Mistakes That Very Smart Couples Make (available at theshmuz.com).
