The Theory of Model Sentiments The Mecca of Ethics Continued...
Taxation
Islamic Economics: In Short
Islamic economics has introduced an awe-inspiring tax code that is the envy of any heterodox economist. There are four distinct taxes, though I would note that the percentages should be adjusted upwards for any modern government to meet its expenses. These taxes are:
• F amous Moment: When Iran tried to expropriate the Anglo-Iranian Oil Company in 1954 and found out that capitalism has HANDS • Most Likely Use: Panicking bankers in casual conversation by calling them usurious stooges and rejecting the idea of interest. • Biggest Theoretical Whoopsie: Maybe arbitrary numbers from thousands of years ago are not the best way to write tax policy? At least the government pretends like there is a justification. • Big Names in School: Muhammad Baqir al-Sadr, Abu Nasr Al-Farabi, and Ibn Khaldun • FMK: Banks, Justice, and Hoarders • Biggest Turn-Off: The Stock Market
• Z akat: A 2.5% tax on savings (wealth) that is to be donated to the poor and indigent. This is to be collected by the government and given to a waqf which is a religious benevolent trust. A tax on wealth instead of income was novel for the time and did wonders in addressing entrenched inequality. • Jizya: A per capita yearly tax that was levied on non-Muslim citizens (with exceptions). The Jizya could easily be repurposed in Australia as a tax on the ultra-wealthy. • Kharaj: A tax on the land of a citizen that is roughly analogous to council rates. • Ushr: A 10% tax on agricultural and later non-agricultural produce paid by businesses. The Ushr could be repurposed as our current income tax. Despite the separation of Church and State, perhaps it is a time for economics to rediscover its moral underpinnings. It is simply not enough for us to teach economists “this is the way it is” without asking the fundamental question, “should this be the way it is?”. This economist sees Islamic economics as a vibrant and economically sound system that could easily be repurposed for our secular world.
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For more Finance & Economics content that con/tests accepted norms, read Linda Pickering’s ‘Out with the Old’ online, at pelicanmagazine.com.au!
