A 1031 Tax Free Exchange—purchasing a building with the profits of the sale of another building so that the taxes on those profits are deferred—the refinancing of a building in order to free up the equity or profit in the building—with no tax consequences—buying a new business with the profits of an existing business—opening a new division with the profits of an existing division.
All of these are legitimate business practices that enable people to avoid or defer paying taxes on profits earned, yet they sometimes give them the sense that there is no charity obligation on those profits earned!
Giving 10% of one’s earnings to charity is fascinating in that there are no specific sources in the Torah that command a person to do so. There are references to which our Sages tie the obligation to give 10% of our earnings to charity but there is no specific commandment. To keep Shabbat, to honor a parent, and the hundreds of other spectacular, positive and negative mitzvot (commandments) written in the Torah are our lifeline and the tools with which we grow closer to Borei Olam (G-d).
Yet the reality is that ma’asser, (giving 10% to charity), is the foundation of that lifeline, and the facilitator of those tools. Charity enables the well being of each and every individual and the survival of a community.
If a man can’t eat—he will be precluded from keeping Shabbat, and if he can’t educate his children to love Torah and successfully navigate the world around them—his efforts to build his family and help build his community will be short-circuited.
Today’s reality is that we are crushing our children with the tuition burdens of our grandchildren’s schooling. Tens of families in our community are becoming disenfranchised from the community and many more are under unbearable pressure with tuition bills that will only escalate. It’s all avoidable.
As unimaginable as it seems, for many community members in their 20’s and 30’s, each new child becomes a source of greater and greater stress. And it’s for good reason: That child’s preschool through high school education will cost his parents approximately $275,000 after tax dollars! That means the family with four children will have to generate $2,200,000 in gross revenue to get their children to complete high school! College is an additional burden. For many financially successful parents this number is simply unattainable.
So do we have a tuition crisis? Yes—of our own making. And that’s because we have a crisis of understanding and conviction. We are blessed to have the resources to enable our children to send our grandchildren to our yeshivot and not be hurt by the process. We simply must give 10%.
The money is there—the will is not yet there. Communities pine for a problem like this! Large families, thousands of children in yeshivah day schools, magnificent growth, financial success and the ability to care for our children is there—we must claim the will.
Three Suggestions:
1. Pay as little taxes as is legally possible, but keep in mind that ma’asser (the 10% obligation) has nothing to do with taxes. Keep in mind as well, that 10% is the minimum one should give.
2. Take care of our children first! Go by the 80/20 rule. Eighty percent of our charity should be directed to those closest to us—family, friends and neighbors.
3. Eighty percent of that 80% should go to the community charity that is larger than all of the other charities combined many times over: our yeshivot.
This issue will define the true greatness of our community—or otherwise. The time for action is now.
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