Policies that contradict timeless truths expressed in the Bible simply don’t work. Confiscatory rates of taxation and punitive inheritance taxes fly in the face of wisdom contained in ancient texts revered by tens of millions of Jews and Christians.
These texts are relevant today because ideologies which the Bible frowns upon inevitably turn out to be poor public policy. For example, when the Good Book labels promiscuity as a sin, believers understand that God is not only indicating His displeasure at this behavior, He is assuring us that no societal good will come of it. The Bible offers insights into destructive taxation policies that prove equally true.
The first Biblical mention of taxation comes in Genesis 41. Bewildered by disturbing dreams, Pharaoh unsuccessfully seeks explanations from his courtiers. Finally his butler, newly released from jail, remembers his cell-mate, the Hebrew lad, Joseph. Joseph interprets the king’s dreams to be God’s forewarning of seven years of plenty to be followed by seven years of famine. In verse 34, Joseph recommends applying a tax upon the Egyptian economy.
Let Pharaoh appoint officers over the land and collect up a fifth part
during the seven years of plenty.
(Genesis 41:34)
He very specifically suggests a figure of one-fifth —or 20%—as the total tax on the country’s gross domestic product.
Although he was an outsider to Pharaoh’s court, brought out from jail, his counsel was acceptable not only to Pharaoh, but even more surprisingly: “…the thing was good in the eyes of all his servants” (verse 37). That a Jewish outsider’s recommendation to tax an entire country should please the monarch stretches credibility. That his subjects also found the recommendation pleasing can mean only one thing: The tax rate they were anticipating, reports Talmudic tradition, was considerably higher than Joseph’s twenty percent. Not only were they relieved, but the thought of being able to retain eighty percent of the fruits of their labors threw them into their work with renewed enthusiasm and energy. This tax plan invigorated the Egyptians and, as one would expect, their economy thrived. Verse 47 confirms that, “The earth brought forth by heaps.”
This Biblical perspective conforms almost precisely to the famous Crandall-Pierce “High Rates, Low Rates—Same Yield” graph which shows that Americans are willing to yield up to twenty percent of their aggregate labors for the common good. Few plead for zero taxation, but neither do they welcome thirty, forty or fifty percent rates either. Certain things seem instinctually built into us.
George Bernard Shaw once observed that even generous men are unwilling to share their wives. That has not changed since Shaw wrote that over a hundred years ago. Similarly the fact that even generous men are unwilling to share more than twenty percent of their income is no stain on their characters. The Crandall-Pierce graph confirms that the human soul rebels at taxation above twenty percent. On tax rates, as on so many other issues, Scripture does not proscribe as much as it describes the immutable laws of human affairs.
Jewish law derives the limits of the king’s right to tax from the prophet Samuel’s dire warning of what will befall Israel should they persist in their perverse desire for a king.
And he (this king you want) will take one-tenth of your seed and of your vineyards….he will take a tenth of your sheep and you will become his servants…and you shall cry out on that day because of the king that you have chosen—and the Lord will not hear you.
(I Samuel 8)
Evidently, even Samuel could not envision a legitimate king claiming more than ten percent of his own people’s produce.
The death tax, the inheritance tax so beloved of politicians, also inflicts damage on our economic productivity. It demonizes every penny a son receives from his late father’s estate.
The children of Israel shall enjoy, each man,
the inheritance of his fathers.
(Numbers 36:8)
The death tax contradicts the enduring importance of linking together consecutive generations. Much of what is achieved by our system of ethical capitalism depends on entrepreneurs continuing to build upon the foundations constructed by their parents. It is also true that people will invent, labor and create tirelessly if they know that in so doing, they are bettering the lives of their children and their grandchildren. Men and women legitimately seek immortality through their children, which is why the Bible devotes so much space to the complexities of inheritance law.
Thou shall cause the inheritance of their father to pass to them.
(Numbers 27:7)
This is to stress that nobody other than a man’s heirs are entitled to his possessions after his death. The notion that a king or a government should become the heir to all men is quite at odds with the Biblical vision and weakens the economic link between parents and children. This contributes to social as well as fiscal havoc in our society.
The final word on taxation in the Hebrew Scriptures is found in the book of Proverbs 12:24 which declares that:
The hands of the diligent shall produce wealth
but the lazy will be subject to taxation.
Ancient Jewish wisdom explains these words as a warning that excessive taxation only comes to pass through the laziness and indifference of productive citizens who decline to resist the oppression. As the prophet Samuel warned, if we fail to exert the necessary vigilance and energy to resist the government’s instinct to tax, we shall only have ourselves to blame for the sad consequences.
Just as it is incumbent on people to recognize that resisting taxation can reflect a moral stand, similarly we must recognize that earning money reflects a moral position. Painting those who work hard and succeed as greedy and undeserving of their wealth is an unbiblical and unethical concept. For good people, believing in the virtue and dignity of work is necessary for making money. Counter the negative message that pervades our society by listening to Boost Your Income: 3 Spiritual Steps to Success. Would you like to have more money than you currently earn? This CD, on sale now, is a good way to start making that a reality.
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Dear Dean–
Queen Victoria and the prophet Samuel too who warned Israel against a monarchy on the basis that a king would grasp, oh, perhaps as much as 10% of their income (Gasp!)
Governments know, better than Queens and prophets that people are slow to turn to violence and each of America’s incremental changes on the road to today’s confiscatory rates has been insufficient to drive us into the streets. The proverbial frog ends up boiled…
Cordially
RDL
I have only been receiving these emails recently, Rabbi you have really inspired me, thank you.
I have always believed there were keys in the Bible for Financial success and have applied the ones I have found over the last 30 years in Business. I have people coming to me , saying… tells us your secret and I smile and say you wont believe me …they say tell me ..Then when they are really ready to know the Truth, I say GOD.
Re taxes ,its interesting just comparing between Australia and New Zealand , New Zealand has none of the these taxes Australia has ..Land Tax ,stamp duty ,payroll tax ,capital gains tax on property . Guess with country is better of economically ……New Zealand ! it has a smaller population and less Government but is in Surplus.
Taxes don’t make a country wealth .
The Government are looking at reducing taxes further ,I have been trying to convince the Government to take it a step further and create so special economic zones ( areas of the country that need stimulus ) effectively a tax free zone for say 10 years to encourage more development .
One last interesting thing ..Queen Victoria (of England ) was worried that in the 1880s there was going to be a revolution in England ,over the increases of taxes in England …they were going up to10%.total
its also interesting that no citizen of England was meant to pay taxes unless in time of war ,this was the case when the magna -carter was written.( As mentioned earlier, American of course had the Boston tea party over English taxes).
All very interesting, that history repeats it self.
Dean
Dear Rabbi Lapin,
In our founders’ wisdom, they chose not to implement a direct tax on the people, but derived revenue from other sources. The federal income tax has only served to increase the size of the bureaucracy and increased the level of control over the people. As you point out, not only do we pay a percentage of our income, but there are other charges on top of the basic rate. We are doubled tax because we pay tax on investments whether in savings accounts or in capital gains.
The federal government is involved in activities which were never granted to it under the Constitution. There is a principle in scripture that has been violated by these politicians. They look at what’s not written and believe that they have a blank check to engage in those activities. Our Founders were clear that any powers delegated to the federal government were reserved to the States and the people. The principle that is violated…”You shall neither add to or take away from the words of the law.”
Finally, governments violate the law by means of civil asset forfeiture. Small businesses have been ruined by this practice which is used to enrich the coffers of government through illegal means.
Thank you for your perspective and clarity Blessings.
Dear Tom–
Civil Asset Forfeitsure is thoroughly immoral, evil, and unconstitutional. A terrifying step on road to tyranny. (What on earth is Sessions doing…? As of 7/26/17)
Cordially
RDL
One more point. I totally agree with the idea or the science of the Kurt Hauser op-ed. For several years I found myself in that tax range of $200k per year as a single person and made the mistake of moving into the next tax bracket up, by paying much higher taxes. I determined, instead of inching higher only to pay more in taxes and take home less, it was prudent to try to stay around $185k. It did squash my ambition. Why work harder to only pay the government all my extra effort?
What is interesting, I just noticed regarding Joseph’s recommendation is the 20% savings on the seven years of abundance (abundance being the key word) was enough to sustain the entire nation as well as its neighbors for seven years of want. I never read it closely enough to see the key was the abundance and always thought the math did not add up. Unlike our government, Pharoah saved it for the people and actually used it for its intended purpose.
I very much enjoyed this bit of wisdom.
Thanks Mary–
Careful scrutiny of Scriptural texts particularly in the Lord’s language nearly always yields dividends. (Just like lower tax rates!)
Cordially
RDL
Dear Rabbi, you mean you don’t want to give your money to the Mega-Government? No, neither do I. On mother’s knee I learned how the Pilgrims experimented with primitive socialism in the early Massachusetts Bay Colony and abandoned the ill-begotten enterprise. Why? It was because socialism extinguished personal initiative and pride of work. Surrendering all your crops to the Colony meant that you could not keep your proceeds. And you received the same meager rations whether you worked for them or not. Idlers and ne’er-do-wells ate just as well as the laborers. Highly unjust! So the productivity of the entire Colony diminished.
Yet the allure of socialism is perennial. Each time they tell us: this time it will be different because WE are the new leaders. WE are in charge. But it will not. The grand system fails, the leaders seek scapegoats to punish for the failure of their grand scheme, and as always, the promised sacred cow of ‘equality’ dies an ignominious death, for some people wind up as always much more equal than others.
Dear James-
The seductive allure of socialism lies in its secularism. Getting rid of God is a compelling (and somewhat understandable) imperative. It’s quite bothersome to have a ‘Boss’, right?
Once secularism is the cult, the natural default for decent people is a socialistic economic system.
Cordially
RDL
The argument for higher taxes on the “wealthy” used by the left is nothing more than coveting thy neighbors possessions. Reasonable people understand there needs to be a certain level of taxation and your discussion points out that there is a biblical standard to go by. Thank you again Rabbi.
That’s it, David!
Exactly.
Cordially
RDL
Oh please. It’s not that simple. Both sides’ habds aren’t clean. I feel that rich people are glorified by alot of self help guru’s these days.
I say the only thing that is wrong in this society is that there is no sense of I am my brothers keeper. This was the first lesson with first born kids from the first created people. Alot of rich people (cough bankers just saying) get rich because they know human behavior (loans anyone). Conniving people on top make up schemes (mortgages student loans anyone?). They know what people will do when you do one thing. Both sides are guilty. The bankers for playing into greed and vanity and the poorer for being greedy and vain.
I say if you are on top and smart use it for good. This is why I like mr Daniel Lapin. He is very smart but uses it for good. With his intellect and skills he could have been another roch schemerz but instead educates alot of people, like me, on how to make better choices. I understand alot of society’s mechanisms alot better because of this man’s efforts in educating people on The Bible. This man right here will be blessed by God even more.
So lets hold other people with gifts accountable. Because that is more fair to goodhearted people like mr Daniel Lapin. If more people were like him i think society would look alot different.
Blessings to the Lapin household.
Awesome read. I love your Ancient Jewish Wisdom.
Thank you LG
We find it encouraging to hear that you are reading and enjoying.
Cordially
RDL
Dear Rabbi – I love how ancient Jewish wisdom reveals that the bible’s “rules” are not arbitrary dictates but practical advice for more successful human living. Thank you for continuing to share and inform. I especially liked your pointing out of proverbs 12:24. Bernie Sanders and his fans should think about that cause and effect relationship. I was telling some college girls how free college means that they will pay for college for the rest of their lives (through taxes) and will never be able to “pay it off” as they can now. Worse, they will pay for it even they choose to drop out of college or not go at all.
But, it does raise a question. Your rendering of proverbs 12:24 is different than I have ever heard. In several English translations I see your phrase “subject to taxation” translated as ‘will become a slave’ or ‘will come under tribute.’ Your translation most clearly ties it to governmental action/taking, while the others do not. Is your translation more of an application of the passage than the actual Hebrew words/meaning? I believe what you have said is correct in either instance. But want to be precise (it says … or it means …) when I bring it up with friends and family.
Keep up the good work!
Dear Mark–
The last word in the 24th verse of Proverbs 12 is “Mas” which in English translates directly as ‘tax’.
Cordially
RDL
How about showing the Crandall-Pierce “High Rates, Low Rates—Same Yield” graph? I couldn’t find it online.
Dear Carlisle–
Wall Street Journal November 28, 2010
Weekend Wall Street Journal op-ed, There’s No Escaping Hauser’s Law, by W. Kurt Hauser (Stanford University, Hoover Institution):
Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised. Better to cut rates and get 19% of a larger pie.
Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration’s budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues.
Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this “Hauser’s Law.”
Over this period there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19% of GDP.
Why? Higher taxes discourage the “animal spirits” of entrepreneurship. When tax rates are raised, taxpayers are encouraged to shift, hide and underreport income. Taxpayers divert their effort from pro-growth productive investments to seeking tax shelters, tax havens and tax exempt investments. This behavior tends to dampen economic growth and job creation. Lower taxes increase the incentives to work, produce, save and invest, thereby encouraging capital formation and jobs. Taxpayers have less incentive to shelter and shift income.
Date sources: top marginal rates from the IRS, Historical Table 23, federal revenue 1930-2002 from US Statistical Abstract, Historical Statistics, federal revenue 2003-07 from US Statistical Abstract, Table 451.
Cordially
RDL
Rabbi Lapin,
You are a great and very smart Rabbi! I am glad that you and your sweet wife and useful vessel Susan have followed the calling of God placed upon your lives. I also appreciate the faithfulness that you have shown to your direct line of fathers in continuing the legacy that each of them helped to build. And I meant to tell you a while back, thank you for sharing the very personal story about your father (or maybe it was your grandfather?) who was trying to get out of his home country (was it Lithuania?) on practically the eve of Nazi occupation. Thank God for His Perfect Timing and your [relative’s] quick perception and obedience. (I think of Elie Wiesel’s account in his book “Night”, of his neighbors who refused to believe the early reports of what was happening to nearby Jewish communities, and therefore would not leave their homes, and then of course it was too late.) Also, and you may have answered it before and maybe I am very ignorant for not knowing, but according to what Tribe of Israel do you reckon your genealogy? Thanks for all of your hard work and study and love and desire to spread God’s Word and Wisdom to everyone who has sense enough to listen!!
Dear Celesta–
From the Tribe of Zebulun.
Cordially
RDL
Thank you, dear Rabbi Lapin. I wish this entire point could be shared with our President Trump.
Our daughter in Israel has been truly tried beyond measure. Now the twins are walking at age 13 months. They set up a meeting with the Beit Din in Tel Aviv and waiting and hurried…. Then the Beit Din told them to postpone it until November.l I am beside myself – davening every day for righteous judges and that Hashem would send Eliyahu and Maschiak.
Yes, I remember meeting, Elizabeth–
Hope things start going more smoothly
Cordially
RDL
Did’nt our forefathers go to war with England over excessive taxation? Why are we so passive about it now. How quickly we forget.
Dear Brian-
It takes human greatness to go to war over a principle. Decadent people just docilely accept each incremental rise in tax. That’s where we are today
Cordially
RDL