Mishpatim 5786 – Tax the Poor

It has long been understood in many countries that the tax system should be built in a way that the wealthier pay more tax — that those with the broadest shoulders should carry the greatest burden. This is done by increasing the percentage tax rate as the level of income rises. However, this creates a backlash in that it disincentivizes people from earning more money, as the extra effort is proportionally taxed at a higher rate.

In Israel, the top 20% of earners paid 80% of the income tax last year. Similar ratios exist in other Western countries.

In this week’s Parsha, judges are warned to judge poor and rich alike: “Do not show favoritism to a poor person in judgment” (23:3).

Rashi explains that a judge should not rationalize that the rich person is obligated to support the poor person anyway through charity. Surely it would be better for the poor person to receive his funds through a legal ruling rather than have to ask for handouts.

Rav Samson Raphael Hirsch goes further in explaining why this potential rationalization is wrong. Dignity for the poor person is not achieved through handouts, even if they come via a legal mechanism. The greatest honour and pride society can give an individual is to treat him as worthy and equal before the law. This poor person may be financially struggling, but the courts must not cut corners for him. Lowering the bar for him would only diminish his own sense of self-respect. There could be no greater damage.

Tax systems should encourage people to be increasingly productive and ultimately turn takers into givers. It is what is best for both the individual and society as a whole.

For any handout related or other financial issues you require assistance with please reach out at [email protected]. Good Shabbos.