Q. Is there any halachic reason why I can’t “fiddle the books” when it comes to paying my income tax?
A. Being a part of society comes at a cost. A halachic rule stated in the name of the sage Sh’muel, dina d’malchuta dina, “The law of the land is the law”, comes in every code of Jewish law. There can be discussion about the parameters of this rule, but nobody disputes that it applies to the payment of taxes.
There can be debate as to how much tax should be levied, but taxation as a principle is not a form of stealing, whilst failure to pay taxes is (Shulchan Aruch, Choshen Mishpat 369:6). Failure to meet tax obligations is a moral as well as a legal wrong, a Chillul HaShem, a desecration of God’s Name (Maimonides, Hilchot G’zelah 5:11, Kesef Mishnah). This not only applies to non-payment but to “fiddling the books”, including fiddling a tax return. Both are a grave infraction of the law against stealing and a desecration of the Divine Name.
One must be scrupulously honest in this as well as every other aspect of life. Ordinary people often complain that whilst they try to be honest, they see “the big boys” rorting the system. Jewish law is adamant that “the big boys” will not escape Divine punishment even if for a time they escape the force of the law of the country.
There is no reason why a person should not benefit from any validly allowed deduction, but concealing or distorting the facts cannot be halachically justified. If you claim a deduction for a charitable donation, you have to be able to prove that you really did give the charity. This is regardless of the religious obligation to give a percentage of one’s income to tz’dakah.
Honesty and transparency should apply in all one’s dealings. In 19th century Goulburn in Australia, there was a saying, “As honest as a Goulburn Jew”. We should all so live as to earn the epithet, “As honest as a Jew”.