The government of Italy recently completed their third tax amnesty in the past eight years. The amnesty—which was only on undeclared income held abroad—resulted in Italians declaring over $120,000,000,000 (that’s 120 billion) that had previously been hidden in offshore accounts bringing in billions of dollars of “windfall” revenues to government coffers and far surpassing projected estimates.
While the economic impact of an amnesty can be remarkable such amnesties are controversial, with many arguing that it rewards and perhaps even encourages tax evasion. Presumably it is this fear of letting cheaters off the hook that explains why, to the best of my knowledge, neither the Canadian or United States government have ever publicly promoted an amnesty scheme. While penalties for tax evasion are bound to be less for those who voluntary come forward a blanket amnesty is something many governments are wary of encouraging.
Balancing the need for justice while enabling the possibility of repentance is a most difficult one. This tension is most readily apparent in the lead up to the High Holiday period; where “repentance prayer and charity can annul the Divine decree [of justice]”. Insisting that justice be fully executed will inevitably discourage many from confessing, something that will do little to help the victims of crime—in the case of tax evasion every single citizen of the country. Yet it does seem unjust to allow criminal activity to go unpunished.
On a practical level it would appear that Jewish law—perhaps reflecting the Divine attribute of forgiveness over justice for sincere repenters—is more concerned with rehabilitation than punishment. While a thief must pay double the value of the object stolen (Exodus 22:6) this is so only if the thief is caught before coming forward to confess. In the latter case only the principal must be paid. This concept of reimbursing the victim, at times more than what was stolen, is in stark contrast to the Western view of crime which is punished with jail time or perhaps with community service- a very worthwhile notion but one that does little to compensate the victim.
The notion of encouraging cheats to admit their wrong was taken a step further by our Talmudic Sages. Jewish law requires that the actual stolen object itself be returned. According to Biblical law if uses stolen material in the construction of one’s home, one would be obligated to tear down as much of the house as necessary in order to return the stolen material. Such is the Biblical demand for justice.
Our Rabbis understood that few, if any, could meet this standard. Invoking the power they have to “modify” Biblical law in monetary matters, the Rabbis issued “an ordinance of repentance” allowing monetary compensation of the value of the stolen object.
Such leniencies are only accorded to those who desire to repent yet find it difficult to do so. In the classic Talmudic formulation a “stolen lulav” is rendered invalid as “mitzvah (sic) accomplished through a sin”. While it is hard to imagine someone stealing a lulav today—though not paying taxes on the purchase of the such may in fact render the lulav stolen and hence the mitzvah invalid—it is unfortunately not hard to imagine ill gotten gains being given to charity.
While the precise amount of the underground economy is by definition unknown it is conservatively estimated to be in the many tens of billions of dollars in Canada alone. While granting amnesty to those who would cheat their fellow citizens might understandably be uncomfortable to many, it is an approach that I believe has much merit both in terms of rehabilitation and in bringing in much needed revenue to government coffers.
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