Vayeishev-Using Ma’aseir Money to save on taxes

Question

There’s a new program in Ohio that allows us to donate money to our school of choice [even a yeshiva] and take a state tax credit up to \$1,500 for the donation. A “state tax credit” means that one can deduct the payment from his taxes (not just his income).  So if I make \$1,000, and the Federal tax rate is 20%, and the state tax rate is 5%, if I just pay my taxes, I pay \$200 in Federal taxes, and \$50 in state taxes.  However, if I donate \$50 to my yeshiva, that entitles me to a state tax credit of \$50. So either I pay \$50 in taxes or I donate \$50 to my yeshiva.  It is as if the state gives my yeshiva \$50.  If we have at least \$1,500 state tax liability, this means that there’s no extra cost to us to donate up to \$1,500 to a yeshiva. Is it appropriate to consider this ma’aser? I think that from Rav Moshe Feinstein’s ruling (Iggros Moshe OC 4, 76) that one cannot use his ma’aseir money to buy a raffle ticket from a tsedoko organization if some people buy tickets for economic reasons even if the money would not benefit a yeshiva, we can derive that he would rule that one could not write off this donation as ma’aseir since the economic gain from this donation is far greater than the economic gain from purchasing a raffle ticket.

Your question assumes that generally one whose income tax is reduced because his donations reduce his taxable earnings can consider his entire donation as a ma’aseir expense and he does not have to give more ma’aseir because of the money he saved on taxes as a result of his donation. Your only question is whether in this case one can still apply this rule.

You mention two differences between this tax benefit and the general tax benefit that results from one’s donation. One difference is that in the case of federal income tax, one’s donation is only used to reduce the taxpayer’s income whereas here it is a tax credit and it directly reduces the amount the taxpayer must pay. You compare this to a present the government is giving you to distribute to the charity of your choice. Since you didn’t distribute your money to charity but merely distributed the government’s money you suggest you cannot consider this as your ma’aseir expenditure.

The second difference is that even if we rule that one can write off his donation as a ma’aseir expense when he receives a tax credit, perhaps that applies only where he receives a credit on a percentage of his donation since then at least the donor used his own money but here, where it costs the taxpayer nothing to give tsedoko, it should not be considered as a ma’aseir expense.

We should note that your first question applies to Israeli income tax as well, since in contrast to the United States where donations only reduce one’s income, in Israel one receives a tax credit equivalent to thirty-five percent of one’s donation.

In order to answer your question we need to first understand why, as you correctly assume, one may write off his entire donation as a ma’aseir expense even though he benefits from his donation.

The primary source that deals with the issue is a responsa of the Iggros Moshe (YD 1, 143). Rav Moshe’s starting point is a ruling of the Taz (YD 249, 1) that even though the Gemoro (BB 9A) refers to taxes as tsedoko, nevertheless, one cannot use his ma’aseir money to pay taxes. Rav Moshe points out three differences between using one’s donation to reduce his tax liability and the case the Taz considered and prohibited. First, whereas in the case of the Taz one gave his money to the government, here he merely keeps his own money. Second, the taxpayer does not cancel an existing debt that the taxpayer owed, since the tax rules merely allow the taxpayer to use his donation to ward off a potential liability but not to remove an existing liability. Third, even if the donation removes a liability, nevertheless, that would not prevent the taxpayer from writing off his entire donation as a ma’aseir expense since the tax benefit is only secondary, known in the Gemoro as tovas hano’o.

The basis for Rav Moshe’s third argument is another ruling of the Taz (YD 249, 1). The Taz rules that one may use his ma’aseir money to buy a mitzvah like an aliya in shul even though he benefits from his ma’aseir money. The Taz’s argument is that ma’aseir money is similar, in this sense, to ma’aseir that one gives from his crop where the field owner may derive side benefits from his ma’aseir. The practical example that the Gemara (Bechoros 27A) gives is that a field owner may accept a present of money from a non-kohein who asks the field owner to give his terumo-tithe to his grandson who is a kohein, in consideration of the present. Rav Moshe argues that a tax benefit is similarly a side benefit that one derives from donating money to a tsedoko cause, which is a proper use of one’s ma’aseir money.

Since we now understand why general tax benefits do not detract from one’s ability to write off his entire donation as a ma’aseir expense, we have to determine if Rav Moshe’s arguments apply in your situation.

The first argument obviously applies since this case is no different from any other situation where the tax benefit merely allows the taxpayer to keep his own money. The second argument applies as well since even when one receives a tax credit, the credit does not serve as payment for an existing debt since no debt exists until the taxpayer actually files his tax forms, whereas the tax credit is written onto the tax form. Thus, it prevents a debt but does not reduce an existing debt. The third argument applies as well since the only difference between this situation and the usual situation is the size of the side benefit that the taxpayer receives but the nature of the benefit is the same. The tsedoko organization received the taxpayer’s entire donation. Just the taxpayer received a benefit from a third party, the state government. The state government is the equivalent of the kohein’s grandfather who gave money to the field owner in the case of the Gemoro and the taxpayer is the equivalent of the field owner. Just like one fulfills his mitzvah of giving terumo even if he derives a side benefit so too the taxpayer donor fulfills his ma’aseir responsibility even though he receives a very large side benefit. In the case of terumo there is no limit on the size of the present a farm owner can accept from a kohein’s grandfather.

According to some poskim there is an additional reason why one can write off his entire donation as a ma’aseir expense even in this case. This reason can be derived from a responsa of Rav Shlomo Zalman Auerbach (published in Kol Hatorah volume 39 question 10). The question was whether one can count as a ma’aseir expense the portion of his personal income tax that the government allocates to charitable causes. Rav Auerbach’s answer was that in Israel where the vast majority of the beneficiaries are Jews it is okay, whereas in the Diaspora, where most beneficiaries are non-Jews, it is not permitted.

This is a more far reaching ruling than Rav Moshe’s ruling since here one’s tsedoko money did not prevent a tax liability but rather his tax money, that he already gave the government because he was required to do so, was given by the government and not the taxpayer to a tsedoko cause and yet Rav Shlomo Zalman ruled that it is considered a ma’aseir expense. Even though Ohio is in the Diaspora but nevertheless since the taxpayer’s money definitely went to a yeshiva, Rav Auerbach would rule that the tax money qualifies as a legitimate tsedoko expense.

Rav Auerbach does not offer any explanation for his ruling but it would seem to be based on the Gemoro (BB 9A) that labels as tsedoko the taxes that the gentiles forced the Jews to pay. The previously cited Taz says that the fact that the Gemara labeled these taxes as tsedoko does not imply that one can write off taxes as a ma’aseir expense. However, the Rishon Letsion (the Ohr Hachaim’s commentary to YD) disagrees and rules that one can write off taxes as tsedoko.

The obvious question on the Rishon Letsion is why taxes should be classified as tsedoko more than any other expenditure, which was the Taz’s argument. The Minchas Yitzchok (5, 34) explains the Rishon Letsion’s ruling based on the Maharsho’s (Chidushei Agados) explanation of the Gemoro’s statement that taxes are tsedoko. The Maharsho writes that it is because the Goyim forced the rich to pay the taxes of the poor. Thus we see that since the goyim used the tax money to assist the poor this money counts as a ma’aseir expense. From this the Rishon Letsion derived that any other use of taxes for a cause that qualifies as a ma’aseir expense can be written off as a ma’aseir expense. We should add that perhaps the Taz would agree with the Rishon Letsion if one limits the Rishon Letsion’s ruling to the portion of taxes that are used for legitimate ma’aseir expenses as the Minchas Yitzchok and Rav Auerbach do, since the Taz only discussed using one’s entire tax payment as a ma’aseir expense.

It would seem that based on a similar case that Rav Moshe as well would perhaps agree to this ruling of Rav Shlomo Zalman and the Minchas Yitzchok. Rav Moshe ruled (Orach Tzedoko page 322) that if a wealthy person is forced to pay higher yeshiva tuition in order to cover a portion of a poor parent’s tuition, the rich person can write off the extra portion of his tuition as a ma’aseir expense. Even though the Yeshiva forced the rich person to give tsedoko to a poor person, nonetheless, the money counts as a ma’aseir expense since it was used to pay a poor person’s tuition expense. Since there is no reason to differentiate between a yeshiva and the government it would seem that Rav Moshe would agree with Rav Shlomo Zalman and the Minchas Yitzchok. (We should note that Rav Shlomo Zalman (ibid) ruled the same way as Rav Moshe in the case of yeshiva tuition, which was to be expected, according to what we explained.)

Finally, you thought to derive an answer to your question from Rav Moshe Feinstein’s ruling that one may not use his ma’aseir money to purchase a yeshiva raffle ticket if the yeshiva sells only a limited number of tickets. Your rationale was that if one may not use his ma’aseir money to buy a raffle ticket because the purchaser may derive monetary gain, certainly if one’s donation wipes out his tax liability he should certainly not be able to consider his donation a ma’aseir expense because he has a sure personal gain in his saving on taxes.

However, if one studies Rav Moshe’s ruling carefully one can see the difference. Rav Moshe explains that the reason purchase of a raffle ticket does not qualify as a ma’aseir expense is because in that situation even people who are not interested in helping the cause may buy tickets because there is a chance that they will enjoy a monetary gain, just like people buy lottery tickets. It is true that the yeshiva benefits from the purchase but it is not clear that the customer is acting to help the yeshiva and therefore, one may not use his ma’aseir money, according to Rav Moshe. The reason the purchase is disqualified is not the actual personal gain but the nature of the action of the customer.

By contrast, in your situation anyone who makes a donation to the yeshiva is doing so because he wishes to assist the yeshiva since there is no possibility one will gain monetarily and if one does not wish to help the yeshiva he would pay the money to the state as taxes.

In conclusion: Even though the state of Ohio grants the taxpayer a tax credit equal to one’s entire donation, the taxpayer may use his ma’aseir money to make the donation.