Tax Evasion

[Be-Ahavah U-Be-Emunah – Acharei-Kedoshim 5772 – translated by R. Blumberg]
Question: What should I do if my employer evades taxes? Am I allowed to work for him? Likewise, am I allowed to buy in a store that evades taxes?

Answer: Tax evasion is theft. There is no difference between stealing from an individual and stealing from the public. The public pays taxes in exchange for various governmental services, and tax evaders receive, through theft, services for which they did not pay. Now then, if you are a partner in evading taxes, as for example, when someone sells products without giving a receipt in return, then not only your employer is evading taxes, but now you, yourself, are evading taxes, i.e., you are stealing. Therefore, you are obligated to tell your employer that you cannot be partner to that theft, even if this means he will dismiss you from your work.

A person is not allowed to do a sin, even if his livelihood depends on it. One is not required to fulfill a mitzvah if he has no money, as when he has no money to purchase Tefillin.

Such is not the case regarding a sin. One is forbidden to do a sin even if he will thereby lose a lot of money (Shulchan Aruch, Orach Chaim 656). Sometimes, our Sages permitted violating a Rabbinic prohibition in the case of great potential loss, but that was only in extraordinary situations, and anyway, here we are not talking about a Rabbinic prohibition, but about the Torah prohibition against theft. Therefore, if a person is being obligated to be a partner to theft, he must vacate that workplace.

True, if he not partner to the sin, but he knows about it, then he is like any person who knows about tax evasion. Does the law require that he report it? One has a duty to report only a criminal act, such as murder, assault or theft (!). But is there is duty to report it according to Jewish law? Yes, there is, as part of “returning a lost object” (Shemot 23:4).

Money stolen from the public has to be returned. It can be viewed in terms of “Do not profit by the blood of your fellow” (Vayikra 19:16).

Rambam explains that this negative precept is not just violated when A wants to steal directly from B, but also when A wants to cause B to lose his money. Therefore, if someone has critical information he is obligated to testify, first of all as part of the laws of testimony, but, adds Rambam, also as part of “Do not profit by the blood of your fellow.”

It thus follows that according to Jewish law, whoever knows about tax evasion, whether by his own employer, or by anyone else, he is obligated to report it, in order to save those being stolen from.

Yet this is a complicated law, for by such means we become involved in the laws of Lashon Hara, forbidden gossip, and Rav Yisrael Meir Ha-Cohain explains in his work, “Chafetz Chaim” that in order to be allowed to report something bad about someone, certain conditions must be met: something beneficial must result from it, the person speaking the Lashon Hara must have that benefit in mind, it must be impossible to achieve that benefit otherwise, etc. It is a complicated issue. Obviously, we are not talking about someone who works for the Tax Authorities and must ascertain whether the law is being followed. He is certainly doing a great mitzvah. As far as a regular person goes, however, this is a complex topic, for the fear is that an atmosphere will take hold in which everyone will begin reporting on everyone else. It’s a complex topic, both for the citizen, and for the worker.

Yet we needn’t forbid a worker to work for an employer who does something illegal, if that worker, himself, is not involved, just as we needn’t forbid his working for someone who violates the Sabbath, when the worker has no connection to that. After all, it isn’t easy to find work. As for buying from a store that evades taxes, or receiving the work or services of a person who evades taxes, there are three situations:

1. The customer is not obligated, whether according to secular law or Jewish law, to check whether the worker keeps proper books or to demand a receipt from him. It’s good to demand one, but there is no obligation.

2. If he becomes aware, however, that the seller or the worker evades taxes, he’s not allowed to buy from him. Otherwise he’s considered to be buying from a thief, which renders one, to a certain extent, a partner in thievery. After all, if the thief finds no one to sell to, he will stop stealing. As our Sages said, “It’s not the mouse that steals, but the hole.” If the mouse has no hole in which to hide its food, it won’t steal.

3. If the seller offers a discount if the customer pays in cash and doesn’t demand a receipt, then the customer is not just assisting the thief, but is himself a thief. Both are thieves, partners in theft, splitting the theft between them.

By the way, a little story. A person invented something that brought him income, and others stole the idea and earned money at his expense. I suggested to him to ask Rabbis to write that it is forbidden to steal his idea from him, and he responded, “I’ve got a lot of experience with this. People listen to rabbis on the laws of Kashrut, but not on the laws of theft. They steal copyrights and they steal taxes.”

Very sad.

Let us be strong and courageous.