Eli Birnbaum
Eli Birnbaum
Rabbi, writer, educator, dreamer, millennial, closet anthropologist

Opening Pandora’s Box


Taxes. The word sends a shiver down the spine. As actor Will Rogers once quipped:

“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.

Truth be told, taxation and Judaism don’t just fit hand in glove because of common stereotypes or contemporary clichés. It may well be that 28 Nobel laureates (and counting) in economics are Jewish, and that being Jewish is almost a prerequisite for going into accountancy, but in truth the questions raised in the wake of the earth-shattering revelations of the Pandora Papers are as ancient as they are complex.

It was ostensibly a dispute over taxes that brought civil war to the early Israelite kingdom, leading to the ten northern tribes splitting from Judea and forming their own sovereign state. What happened, I hear you ask? Well, it was quite simple. In completing the vast project of constructing the Temple in Jerusalem, King Solomon needed to levy heavy taxes on his nation. After his death, the people (led by the eventual ruler of the breakaway northern kingdom, Yeravam ben Nevat) sent a delegation to Solomon’s son and heir, Rechavam, asking that he review and reduce his father’s fiscal policy.

Rechavam first sought counsel from Solomon’s advisors. Drawing on decades of experience, they urged caution:

If you will but subjugate yourself to the people’s wishes just this once, and respond to them warmly, they will subjugate themselves to you forever.

(I Kings 12:7)

Rechavam then made the fatal error of consulting his friends – a peer group who had grown up, like him, in the lap of British Overseas Territory luxury, totally disconnected from the rank and file masses who had neither potato nor cake to eat.

They urged him to drop the proverbial carrot in lieu of the stick and raise taxes even further. He listened. The people rebelled. He went to war. The people fought back. The war was inconclusive. The Jewish kingdom split, never to again be reunited.

From the Judean tax-collectors reviled in the New Testament, to the establishment of an ‘Exchequer of the Jews’ by Richard I (the guy ironically made famous by the story of Robin Hood. Or should that be ‘Reuben Hoodstein’?) in 1186 to manage and regulate the capital taxes of England’s rapidly growing Jewish population, the ‘taxman’ has seemingly always been a reviled figure, an economic grinch who exists to spoil everyone’s fun.

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Being as it was that ancient tax collectors generally operated with the full clout of the monarch behind them, they essentially had carte blanche to take what they wanted, when they wanted, squirrelling away a nice personal nest egg for a rainy day. As long as the king could afford to wine, womanise and war and the crown treasury turned over a nice profit despite all of those ‘company expenses’, the taxman was hailed at court as a hero, all the while cursed out of court as a villain.

Intriguingly, classic Jewish sources deal less than generously with tax collectors. The Talmud (Sanhedrin 25b) lumps them in with robbers and gamblers as a group of individuals whose testimony cannot be accepted in a court of law, such is the industry’s presumed level of untrustworthiness. Elsewhere, the Mishnaic sages (Bava Kamma 10:1) advise against accepting charitable contributions from them. Why? We simply do not know where the money is from and whether or not it is ‘kosher’.

But as Bob Dylan (another good Jewish boy who may not be so squeaky clean when it comes to tax avoidance) once sang: The times, they are a-changin’.

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From Wikileaks to Panama to Pandora, the shoe is very firmly on the foot. No longer is the taxman that loathed Sheriff of Nottingham figure. No siree. These days, the tax payer – especially those who inhabit the upper GDP stratosphere – are essentially assumed to be guilty until proven innocent.

Here’s the rub.

Pretty much everyone agrees that the process of tax ‘evasion’ is illegal and wrong. From fiddling income figures to making somewhat imaginative expense claims, to dealing cash-in-hand without receipts, outright evasion of taxes is a relatively straightforward banner around which we can all unite in indignant righteousness.

With regards to tax evasion, the Halachic position is similarly unequivocal – even when dealing with seemingly arbitrary taxation. In Mishnaic times, it appears that a tax was levied on the purchase of certain garments. Within days of this law passing, the more imaginative citizens of Babylon and Judea started a brand-new fashion trend: they would wear the taxable garments, but cover them up by wearing tax-free clothing on top, thereby evading Milan’s finest tax inspectors. This trend would not be repeated en-masse until the era of global aviation, when passengers desperate to avoid paying for overweight luggage would empty their suitcases and transform themselves into sumo-sized sartorial mountains.

Addressing this subterfuge, the Talmud (Bava Kamma 113a) states: Unless the taxman is given carte blanche to collect what he wants, when he wants; or if he unilaterally appoints himself to the job as a local strongman, it is forbidden to evade taxes. Indeed, the famed sage Rabbi Akiva condemns monetary chicanery for the simple reason that it causes a desecration of God’s Name.


But what about the fathomless shades of grey that constitute that most subjective, almost purposefully vague Bermuda Triangle of financial legalese wherein no laws have been broken yet the ‘spirit of the law’ lies in tatters and the ripple effect is ruinous to wider society? What about tax ‘avoidance’?

Unsurprisingly, this issue is also not a new one. Build a law, we’ll tunnel under it with a loophole. Close that loophole, we’ll dig another one. And so on, and so forth until the Redeemer comes unto Zion, and let us say ‘amen’.

Speaking of a time as ancient as the second temple era, the Talmud (Berachos 35b) describes one such loophole. It would seem that early Jewish accountants spotted a peculiar quirk in the phraseology used by the Torah in legislating the system of tithing produce to distribute those tithes to the Levites, the poor and the destitute:

“I have removed the consecrated (as yet untithed) produce from the house.” (Deut. 26:13) is taken to imply that produce need not be tithed until it is brought into the house or storage barn in the normal way. This created a loophole which, although strictly speaking legal, left the spirit of the law in tatters. What would early Judean farmers do? They would bring their produce inside via skylights and rear courtyards in order to avoid that produce ever being rendered liable to be tithed. Genius.

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As someone who believes that the Torah was dictated by God to Moses during our sojourn in the Sinai desert, I have often wondered why that and other loopholes weren’t just cut off at source. It’s a theological dilemma. An all-knowing God would have spotted them, yet chose not to close them. Why not?

I think the answer to this question cuts to the heart of the current furore over tax avoidance.

You see, the thing that is perhaps more infuriating than anything else is the fact that in the vast legal no-man’s land between payment and evasion, tax in general is a roulette of conscience which boils down to one question: How nice do I want to be? The answer to this will fall somewhere on the spectrum between the obviously more permissible avoidance methods such as pension plans and ISAs, and the seriously questionable schemes such as offshore shell companies, inside deals with friends and family or, as Dylan did, selling an item (music) considered intangible under current capital gains tax law by certain state authorities.

In other words.

Prevailing wisdom has it that a government will seek to tax behaviours it doesn’t want to encourage. Why? Well, on the one hand, allowing the masses to engage in those behaviours cheap n’ easy could cause a criminal and/or medical emergency. And on the other hand, it is because such taxes are most likely to be accepted by the majority law-abiding voting public. So, we tax nicotine to discourage smoking. We tax alcohol to discourage drinking.

But what happens when the government wants to tax something that isn’t destructive? Something like earning an income, for example?

Here’s where things get complicated. By setting up a system that is non-binary, instead spanning that vast space from payment through avoidance all the way up to outright evasion, the state is essentially testing the moral fibre of its populace: How guilty do you feel about that offshore account? About that company that exists on paper in a two-room office that apparently hosts a thousand other companies? And you know something? The guiltier you feel and the more you heed the voice of morality, the more taxes you will pay.

Leaving loopholes open means we are basically taxing conscience.

Let that sink in for a moment.

Here’s the equation: The nicer I am, the more I pay.

Does that sound like a formula that encourages people to act morally?

Perhaps the solution lies somewhere other than closing every avoidance loophole and rendering taxation a binary choice between paying and evading. Perhaps the solution lies in a complete attitude shift. An attitude encapsulated perfectly by our sages (Jerusalem Talmud, Demai 3:2):

Rabbi Shimon bar Kahana was once assisting Rabbi Lazar on a walk through a vineyard. Rabbi Lazar asked him: ‘Please break off a splinter of wood from the fence so that I may use it as a toothpick’. But as Rabbi Shimon walked toward the fence, Rabbi Lazar called him back, saying: ‘Actually, forget about it; it may not seem like a big deal if I take a mere splinter of wood, but what if every resident of the city were to think like me? He’d have no fence left!

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The Torah legislates intricately and broadly. But it also leaves grey areas within which Jiminy Cricket hops off your shoulder and you are left with nothing but your wits, internal moral compass and a rather urgent question: Even though technically I can get away with this, do I want to be ‘that guy’? Left to my own devices (legally and literally), will I remain a loyal reflection of the Divine, or will I instead resemble a school child whose teacher has momentarily left the room?

Rabbi Lazar perceived this issue, and taught its importance to his student. True enough, if I enjoy a toothpick right here, right now, nothing much will happen. The harm to the vineyard’s fence will be almost imperceptible. But what if others learn from my attitude? What if the entire town adopts that attitude? What if, in times of extreme economic hardship, soaring unemployment, mounting deficits and rising inflation, all those who can decide to beat a great financial retreat and leave behind a gaping hole in excess of $600 billion per year in haven-secure revenue tax?

Then what?

The fence collapses.

Perhaps it is time for an attitude shift. By framing tax avoidance not as an act of clever legal hocus-pocus, a game of cat and mouse between the IRS or HMRC and accountants. Let’s frame it as a moral choice; a decision which – at an individual level – may well be little more than a rogue toothpick, but at an international level is causing the entire fence to rot and collapse.

The Torah urges:

“And you shall do that which is right and good in the eyes of the Almighty.

(Deut. 6:18)

Nachmanides adds: Our sages expand this verse beautifully, seeing it as a call to act above and beyond the technical letter of the law. That is, even when you are not directly commanded to act in a certain way, pause and reflect for a moment and ask: ‘With God watching, what is the right thing to do?’ The answer to this question will come to define the very fabric of society; the innumerable links that tie individuals and communities together.

About the Author
Born and raised in London, England. I spent six years in Talmudic College before studying for Rabbinic ordination in Jerusalem. I hold a BSc in Criminology & Social Psychology. I am fascinated by pretty much everything, but nothing more so than exploring current affairs through the kaleidoscope of Jewish continuity in the 21st century. I currently oversee Aish UK's educational and published content. (All views expressed are my own, and do not necessarily represent those of Aish UK).
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