Great insights, the part about it being a balancing act in particular. I do wonder if instead of trying to tax the rich we instead forced some kind of ratio where the rich can't have more than X % of their lowest paid worker and so would have to compensate those who helped them get rich more would work better. Dismantling the crony-capitalism where the top have no risk and get to keep all the rewards feels like a more straight forward path though. If you take a risk and it goes well, you should be able to keep it (as long as you aren't exploiting others), but if it goes south then you eat all that risk and someone else gets to take the chance after you fire sale all your assets. That's the change I would like to see.
If wealth is taxed, it has to be marked to market. Oooooooh the pain, the pain.
More important, the US states that don't have income taxes support themselves in other ways (Texas is heavy on property tax) and this generally includes surprise fines, which penalize the unwary. Like living in a police state but instead of surprise jail it's surprise taxation. A low state income tax is a more predictable burden.
You forgot the final link in this chain - who the interest on the debt is paid to. The US could print their own money and not pay any interest to the Federal Reserve. Not sure about how this works in other countries. The people collecting the trillion dollars in interest are driving the bus that uses middle class worker bees to fuel it. You are correct that taxing the rich will never work. Here in California we will vote on a tax the rich initiative in November. I try to explain to people that the rich will just move out of CA and possibly take their businesses with them, and it's already happening, even though the election result is not guaranteed.
The other important factor is why governments have such an insatiable and growing need for more money. After some of the recent scams and scandals (DOGE has gone rather quiet, unfortunately) I'm now convinced that many people go into politics and government jobs so they can steal for themselves and their cronies. Probably this siphons off much more money than your typical billionaire getting favorable legislation passed for his niche business. The proliferation of NGOs is a deliberate setup for wealth transfer from the middle class to the grifting class - those who do no productive work but cleverly create and game specific situations. Check out the COVID-era unemployment payment scam ($250 billion), the hospice network fraud in CA (merely several hundred millions), daycare fraud in MN, etc. It appears people up to the highest levels of government know about and endorse many of these, and billionaires are not involved. But taxing the latter sure does play well with the voters. As your Bar story points out, around 40% of people pay no taxes and a lot of them are on the receiving end of the various doles, so they are reluctant to disturb a system that they live off.
1. interest: I didn't actually forget that, I didn't include it as that deserves its own piece. I'll slot it down and see that I can get something on paper next week 😉. FYI: the US does pay interest to the FED. It's just that the FED immediately sends it back to the Treasury.
2. California is already in there, but yeah. "tax the rich" polls good. Even as it doesn't work. Capital is mobile...
3. corruption: agreed on that, and THAT is what should be tackled first and foremost, but as DOGE showed us: the swamp is too deep, so it can't be drained. Maybe with a semi-dictator and given 40 years of continuous policy of "MAGA" (the real kind)... But No1 can do that...
I've watched, queried, studied, loved & been repulsed by "Americans" from Park Bench Bums to Park Place Billionaires; By the time I was 18 I'd traveled (working) through 39 states, 44 states total now.
Lot's of Uniparty (D)&(R) partisans, nary a Son Of Liberty to be found (the trap) 😐
Used to be a hordes of hardworking, honest folk (mostly) that were happy with their lot; America was the land of peace, prosperity & promise, but the boomer hippies drank up that milkshake, poisoned it with lies, corruption, theft & fraudulent *everything* 🙊 🙈 🙉
That brings me to an anecdotal that's indicative of the *rot* in Klownifornia, the once "Goilden" state:
I have a SIL that works as a community college "guidance" counselor in a San Diego county location...
She owns a *new* $2 million dollar McMansion in a gated community, drives new Porsches & provides for 2-3 of her children that failed to launch; Her husband (Int'l. negotiator) died from mRNA poisoning in 2021, leaving her a life insurance policy & some assets.
But something was off, to me, about her standard-of-living, so being she works for a "public" entity I looked for a financial report; Seems her salary is $255k with add on benefits pushing it well over $320k.
Then, for $hits & giggles, I looked at the other "salaries" for this community college; I had to peruse 55 pages of the ledger before I found "employees" making less than $100k!
This is not an outlier, this is the norm for California Communist Party "loyalists"...
The entire charade is based on "free" money created via "cheap" bonds, but that won't last forever.
(Whilst the infrastructure & critical "services" rot into 3rd world status)
Anyone with *real* assets and/or business enterprises are fleeing the state en masse, which will soon include my wife & I, as the BioLeninism, gangs, racial animus & gen pop criminality/graft have become to odious to endure...
"It's free, comrade, but we don't have any." ~ Mayor Karen
Piffle, C19th liberalism had three C20th bastard children, bourgeois liberalism, fascism and Stalinism. They're the three cheeks of the statist arse. The liberals are fascists in cardigans, they take them off when the going gets bad, as can be seen in the US and Britain. The only real alternative is anarchism, that starts with the abolition of the state not its usurpation.
As a non-paying subscriber, I’m always grateful to read No1’s work, even if I do arrive too-late for the take-up and throw-downs.
My comments, most always, are throwaway anyway, but I do sometimes notice correlations to my own way of thinking….
I coined a term a few years ago that I believe describes the balance you are perhaps referring to…
Dynamic balance.
I was always taught that fence-sitting is bad, when, in terms of energy, I discovered it actually explains quite-a-lot.
Physically speaking, sitting on a fence is not only difficult, but the higher the fence then the more the body is required to adjust to microscopic changes - in muscle tension. It’s not so much a static thing then, more a to-and-fro that speaks to something far deeper than wobble (though wobble it is).
Fail to balance (dynamically speaking) and the fence soon meets its extremes and will fall (often either way, depending on the building energies and starting point, which supports the idea of all extremes being energetically equal, a bit like left and right - democrat and republican) – yeah, well fuck-it.
Anyway, the most energy is found at the transition point…centre that is, it’s the point of cell division and that of splitting atoms, and the place we find it hardest to hang-out as humans.
If we want to find dynamic balance now, in the midst of our own upcoming destruction, then we must talk about all aspects at once, and solve each using the same technique.
Balance isn’t natural. So, if we are to find it, it’ll take a whole load of gutsy muscle and a will - not to fall too-far either way.
And I have to mention the caveat: if one does happen to fall too far, it’ll take additional gutsy muscles to pull one back to dynamism. Too much and….
I normally don't care about what another person has, these rumors of the insider trading done by both regimes and 99% of congress make me want to (fed post).
Another way to frame the issue is the 'politics of envy' vs. the 'politics of greed.'
Envy requires very little effort, whereas greed requires a fair amount if you're going to have any success at it. In a democracy, the implication is that the majority will always vote to tax the rich because the rich are an envied minority, whether or not they got rich by greed, good luck or actually providing a valuable service. They are hated simply for being rich.
There are online calculators available so you can determine what part of your income is subject to Zakat. I use this one when making my contributions which I spread out over the year, but typically Zakat is paid during Ramadan.
That’s a beautiful practice, and it's great that you use a calculator! Just a small, friendly clarification on how Islamic law defines 'rich' and 'income':
1. Who is 'Rich'? You are right that it's not just for billionaires. In Islamic law, anyone whose savings reach a minimum threshold (called Nisab, roughly the value of 85g of gold) is technically categorized as 'wealthy' and must pay.
2. Savings, not Income: Zakat is not an income tax. You don’t pay it on your monthly paycheck. You only pay Zakat on savings that have been held continuously for one full lunar year.
3. Timing: Paying in Ramadan is wonderful for the extra spiritual reward, but technically, Zakat is due on the exact date your accumulated savings complete one full lunar year, regardless of the month
You hit the nail on the head! You are absolutely right—in this specific context, 'rich' doesn't mean a multi-millionaire; it literally means 'able to save' or 'self-sufficient'. The Arabic word used is Ghani, which means 'free from need'. If you can hold onto ~85g of gold for a full year without needing it to pay for your basic survival (food, rent, debt), you are considered financially secure enough to help those who have nothing.
And since you are a gold bug, you will appreciate this detail: Islam also set a minimum threshold for Silver, which is exactly 595 grams. If you divide 595 by 85, you get an exact 7:1 ratio by weight! This threshold was established over 1400 years ago, which is astonishing because it perfectly aligns with the historical natural mining ratio of silver to gold in the Earth's crust. It reflects a deeply profound and historically stable monetary standard.
Hey thanks for clearing that up. I'm not Muslim, I just adopted the Zakat model since the charity I donate to is Islamic Relief, and using their calculator removes the guess work.
You're very welcome! It’s wonderful that you find the Islamic Zakat system so practical and precise. Since you already appreciate the wisdom and fairness of its financial laws, I warmly invite you to look into the core message of Islam itself—the belief in One God. You might find its spiritual foundation just as beautiful and logical!
Thanks. I think we're both on the same page when it comes to One God. My point of reference is Christianity, although I have to admit I'm not very observant. I would describe myself as syncretic. Where something makes sense to me I adopt it.
The issue with the 'syncretic' approach—picking only what makes sense to us—is that human minds and opinions constantly change over time. What makes sense to you today might not tomorrow, and no two people will ever agree on the exact same 'mix'.
But the amazing thing is, if you deeply use your logic to examine Islam, it makes absolute perfect sense. It builds a society based on honesty, good morals, tolerance, and low crime—with the ultimate goal of eternal Paradise. I have honestly never seen a society quite like a true Islamic one.
On a personal level, I pray 5 times a day, and the peace it brings is indescribable. It’s like instant therapy for the heart. I genuinely don't know how some people live without it! The same goes for the fasting month of Ramadan; it brings this beautiful, internal spiritual happiness that is hard to put into words.
Islam also heavily commands honoring and serving parents. This is why you’ll almost never see nursing homes in our communities. Having my own elderly mother living with me and caring for her is a normal, blessed part of life, just as it is for virtually all Muslims. We care for them until their last breath.
One quick disclaimer, though: true Islam is strictly what the Prophet Muhammad and his early companions practiced. There are deviant sects and extreme groups out there (like ISIS, or sects like the Shia and Sufis) that the Prophet actually warned us about. They try to distort the image of Islam from the inside, and true Islam is completely innocent of them.
While welfare programs have a similar goal, Zakat is fundamentally different:
1. It taxes stagnant wealth, not income: It takes 2.5% from hoarded wealth, not from people's paychecks. This targets the truly rich without burdening the working class.
2. No bloated bureaucracy: It goes directly to strictly defined categories of needy people. It's a divine right for the poor, not a political favor or a tool to create government jobs.
Zakat varies from place to place. In some countries it's obligatory, in others voluntary. The taxable amounts also vary depending on the country and the interpretation of Koran.
There is a mix-up here between modern state laws and Islamic law (Sharia).
1. It is never voluntary: Zakat is the 3rd pillar of Islam. It is strictly obligatory on every eligible Muslim worldwide. If a specific government does not collect it, the individual is still religiously mandated to calculate and distribute it themselves. (Voluntary charity is a completely different concept called Sadaqah).
2. The rates are universally fixed: The taxable amounts and percentages (like 2.5% for cash, gold, and silver) do not vary by country, nor are they open to interpretation. They were strictly and precisely fixed by Prophet Muhammad (peace be upon him) over 1400 years ago, and no government or scholar has the authority to change them.
1. It is never voluntary: Zakat is the 3rd pillar of Islam.
Correct. What I meant is not all governments make it mandatory.
"Today, in most Muslim-majority countries, zakat contributions are voluntary, while in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan and Yemen, zakat is mandated and collected by the state (as of 2015).[18][19]"
The 2.5 is fixed, I agree, but you will find variations in the calculation. For example:
"Most contemporary scholars recommend using the silver nisab as it is more inclusive and benefits more Zakat recipients. However, some scholars prefer the gold nisab as it better represents meaningful wealth in today's economy. Our calculator displays both values with live prices so you can make an informed choice. The nisab you choose affects whether you're obligated to pay Zakat—if your total zakatable wealth exceeds the nisab and has been held for one lunar year (hawl), Zakat becomes due at 2.5% of your total wealth. Learn more on our detailed Nisab Guide."
By the way, just to add a quick piece of context—there are actually two completely different types of Zakat in Islam!
1. Zakat al-Mal (Zakat on Wealth): This is the one we’ve been discussing—the 2.5% on savings and assets held for a year, strictly for those who meet the wealth threshold.
2. Zakat al-Fitr (Zakat of Breaking the Fast): This one is totally different. It is paid once a year right at the end of Ramadan, before the holiday (Eid) prayer. It isn't a percentage of wealth, but rather a small, fixed amount of staple food (like rice, barley, or dates). The catch? Everyone has to pay it, rich or poor, as long as they have enough food for that single day. The goal is to make sure absolutely no one goes hungry during the community celebration.
Good catch.. You're totally right on how it plays out in the real world today.
Just two quick points on why that is:
1. Governments: If a modern state doesn't collect Zakat, the religious duty doesn't vanish. Individuals just have to calculate and hand it out themselves. Historically, the first Caliph (Abu Bakr) actually went to war against tribes that refused to pay it!
2. Gold vs. Silver: The calculator debate only exists because of modern paper money. The Prophet set strict limits for physical gold and silver. Since fiat cash is neither, modern scholars usually peg paper money to the silver threshold because its value is much lower right now. That brings more people into the paying bracket, which ultimately gets more money to the poor.
How do you define stagnant wealth? Most of the wealth the rich hold they hold in productive assets. They may be in a financial form, such as stock holdings; but they still represent ownership in productive assets (at least, one would hope they are productive).
I believe the problem here in the States is we have financialized our economy to far too large a degree, and most of what is called wealth is smoke and mirrors, electronic digits on a ledger. Another problem seems to be much of the "real" wealth, the wealth produced by what is needed, gets siphoned off by middle men and financiers, leading to greater concentration of said assets into fewer hands.
Some of us think that the more we allow a government to care for the needy, the more we dissolve the social bonds needed to provide for more local solutions to the problem of those in need.
I don't know if your solution would work here. We have too many factions, less social cohesion than we had even 40 or 50 years ago.
My comment about government jobs was a bit of sarcasm, by the way. I feel compelled to mention I retired from the post office, so maybe I should throw no stones. 🤔
You make excellent points. Here is how the Islamic system addresses them directly:
1. Productive Assets: Zakat does apply to stock portfolios, financial instruments, and business cash reserves. Physical machinery is exempt to encourage production, but circulating capital is taxed to keep wealth moving.
2. The 'Smoke & Mirrors' Economy: Islam completely agrees. This is exactly why it strictly forbids interest (Riba) and extreme speculation. It forces investments into the real economy, preventing middlemen from siphoning off true wealth.
3. Local Social Bonds: Zakat was designed to be intensely local. Historically, it is collected from a community's wealthy and given directly to that exact community's poor. It’s a personal duty that builds social cohesion, not a faceless government handout.
Community, one thing that has changed over time here; not gone, but weaker. There is no one cause, but the one I would say was most important was the rise of inflation (excess money creation causing price rises that outstrip incomes.) Empires are very expensive. :-(
You have highlighted a profound truth. The link between inflation—which acts as a hidden tax that devalues people's hard work—and the erosion of community is undeniable. When individuals are forced into a constant state of financial survival, social bonds naturally fray.
Interestingly, Islamic economic principles address this exact issue. Historically, Islamic law mandated that money should have stable, intrinsic value (like gold and silver) to prevent authorities from arbitrarily expanding the money supply to fund their excessive spending (the 'empire' costs you mentioned). Manipulating currency to print money without backing causes inflation, which Islam prohibits as it is considered a form of unjustly consuming and stealing the wealth of the common people
It seems to me that the generation scheme of money getting more money, once one is in ""the club" is the root, and taxes just deal with the fruits.
Eliminating the unfair-playing field, really leveling it in terms of income generation at different levels of wealth, so that wealth does not automatically extract more wealth, immiserating wage-earners, is the fundamentally better project.
Compound interest and unmitigated creditors-rights are problematic to any society.
This idea makes some sense. Look at the drop in the share of income in the US going to labor (the alternative being the share of income going to capital) since the 1950's: https://fred.stlouisfed.org/series/PRS85006173
You are absolutely right No 1! The issue I see is that most of our countrymen don’t give a damn about the corruption in our economy. They’re fine with big pharmaceutical companies getting legal immunity for their products (e.g., vaccines) and the “genius” Elon Musk getting rich since his customers were paid $7,500 in tax credits by the US Treasury for buying a Tesla. Look at the Mag 7 tech stocks, not one would have the market cap they do without government contracts. End the corruption and we might start to see some improvement.
Superb, as usual. Looking at the world today, the only solution appears to be for people of a sane mindset to start a new country. Because there’s no way on earth the existing countries can or will get out of the messes they’re in. There will be lots of sound and fury, “we’re going to do this” and “we’re going to do that,” as way down they continue to go.
You're spot on that the tax the rich thingy would be better spent fighting the socialized losses but privatized gains syndrome.
At the same time, i can't feel anything but weirdness to know that a guy like Elon is a trillionaire whilst others earn 1$ a day elsewhere in the world.
No amount of creativity / ingeniosity, risk taking is worth such extreme imbalance
The rich are the visible signs of rental incomes of corporations that have set up legislation to ensure their monopoly and cartel status. Australia has the highest concentration of market power - every sector dominated by 2-4 companies, and the stagnation and squeezing shows. Eg Telstra ensures internet and mobile bills constantly rise, even as their costs decline, and Visa collects %1.5 of every card transaction, a new tax.
Increasing competition is every rental income company's weak spot.
China regularly disappears billionaires like Jack Ma, who reappear months later apologising for their greed and obscene wealth, and loopholes or semi-legal areas their companies have been taking advantage of closed. This adhoc approach acknowledges that laws cannot stop corporations and capitals from finding workarounds, and is hard to defend against by billionaires.
Great insights, the part about it being a balancing act in particular. I do wonder if instead of trying to tax the rich we instead forced some kind of ratio where the rich can't have more than X % of their lowest paid worker and so would have to compensate those who helped them get rich more would work better. Dismantling the crony-capitalism where the top have no risk and get to keep all the rewards feels like a more straight forward path though. If you take a risk and it goes well, you should be able to keep it (as long as you aren't exploiting others), but if it goes south then you eat all that risk and someone else gets to take the chance after you fire sale all your assets. That's the change I would like to see.
🎯
If wealth is taxed, it has to be marked to market. Oooooooh the pain, the pain.
More important, the US states that don't have income taxes support themselves in other ways (Texas is heavy on property tax) and this generally includes surprise fines, which penalize the unwary. Like living in a police state but instead of surprise jail it's surprise taxation. A low state income tax is a more predictable burden.
As Newsom pointed out, though he's prone to being too condescending to make it work, it can be more expensive in Florida when it comes to taxation.
You forgot the final link in this chain - who the interest on the debt is paid to. The US could print their own money and not pay any interest to the Federal Reserve. Not sure about how this works in other countries. The people collecting the trillion dollars in interest are driving the bus that uses middle class worker bees to fuel it. You are correct that taxing the rich will never work. Here in California we will vote on a tax the rich initiative in November. I try to explain to people that the rich will just move out of CA and possibly take their businesses with them, and it's already happening, even though the election result is not guaranteed.
The other important factor is why governments have such an insatiable and growing need for more money. After some of the recent scams and scandals (DOGE has gone rather quiet, unfortunately) I'm now convinced that many people go into politics and government jobs so they can steal for themselves and their cronies. Probably this siphons off much more money than your typical billionaire getting favorable legislation passed for his niche business. The proliferation of NGOs is a deliberate setup for wealth transfer from the middle class to the grifting class - those who do no productive work but cleverly create and game specific situations. Check out the COVID-era unemployment payment scam ($250 billion), the hospice network fraud in CA (merely several hundred millions), daycare fraud in MN, etc. It appears people up to the highest levels of government know about and endorse many of these, and billionaires are not involved. But taxing the latter sure does play well with the voters. As your Bar story points out, around 40% of people pay no taxes and a lot of them are on the receiving end of the various doles, so they are reluctant to disturb a system that they live off.
1. interest: I didn't actually forget that, I didn't include it as that deserves its own piece. I'll slot it down and see that I can get something on paper next week 😉. FYI: the US does pay interest to the FED. It's just that the FED immediately sends it back to the Treasury.
2. California is already in there, but yeah. "tax the rich" polls good. Even as it doesn't work. Capital is mobile...
3. corruption: agreed on that, and THAT is what should be tackled first and foremost, but as DOGE showed us: the swamp is too deep, so it can't be drained. Maybe with a semi-dictator and given 40 years of continuous policy of "MAGA" (the real kind)... But No1 can do that...
I've watched, queried, studied, loved & been repulsed by "Americans" from Park Bench Bums to Park Place Billionaires; By the time I was 18 I'd traveled (working) through 39 states, 44 states total now.
Lot's of Uniparty (D)&(R) partisans, nary a Son Of Liberty to be found (the trap) 😐
Used to be a hordes of hardworking, honest folk (mostly) that were happy with their lot; America was the land of peace, prosperity & promise, but the boomer hippies drank up that milkshake, poisoned it with lies, corruption, theft & fraudulent *everything* 🙊 🙈 🙉
That brings me to an anecdotal that's indicative of the *rot* in Klownifornia, the once "Goilden" state:
I have a SIL that works as a community college "guidance" counselor in a San Diego county location...
She owns a *new* $2 million dollar McMansion in a gated community, drives new Porsches & provides for 2-3 of her children that failed to launch; Her husband (Int'l. negotiator) died from mRNA poisoning in 2021, leaving her a life insurance policy & some assets.
But something was off, to me, about her standard-of-living, so being she works for a "public" entity I looked for a financial report; Seems her salary is $255k with add on benefits pushing it well over $320k.
Then, for $hits & giggles, I looked at the other "salaries" for this community college; I had to peruse 55 pages of the ledger before I found "employees" making less than $100k!
This is not an outlier, this is the norm for California Communist Party "loyalists"...
The entire charade is based on "free" money created via "cheap" bonds, but that won't last forever.
(Whilst the infrastructure & critical "services" rot into 3rd world status)
Anyone with *real* assets and/or business enterprises are fleeing the state en masse, which will soon include my wife & I, as the BioLeninism, gangs, racial animus & gen pop criminality/graft have become to odious to endure...
"It's free, comrade, but we don't have any." ~ Mayor Karen
curious how Americans can't tell the difference between fascism and communism.
Political leanings are a circle. In the end both fascism and communism end up as dictatorship.
Piffle, C19th liberalism had three C20th bastard children, bourgeois liberalism, fascism and Stalinism. They're the three cheeks of the statist arse. The liberals are fascists in cardigans, they take them off when the going gets bad, as can be seen in the US and Britain. The only real alternative is anarchism, that starts with the abolition of the state not its usurpation.
Capital goes where it is treated best.
Keep it simple stupid: You don't need to tax them more, just don't bail them out like in 2008 and 2020.
🎯
I’m late to this
As a non-paying subscriber, I’m always grateful to read No1’s work, even if I do arrive too-late for the take-up and throw-downs.
My comments, most always, are throwaway anyway, but I do sometimes notice correlations to my own way of thinking….
I coined a term a few years ago that I believe describes the balance you are perhaps referring to…
Dynamic balance.
I was always taught that fence-sitting is bad, when, in terms of energy, I discovered it actually explains quite-a-lot.
Physically speaking, sitting on a fence is not only difficult, but the higher the fence then the more the body is required to adjust to microscopic changes - in muscle tension. It’s not so much a static thing then, more a to-and-fro that speaks to something far deeper than wobble (though wobble it is).
Fail to balance (dynamically speaking) and the fence soon meets its extremes and will fall (often either way, depending on the building energies and starting point, which supports the idea of all extremes being energetically equal, a bit like left and right - democrat and republican) – yeah, well fuck-it.
Anyway, the most energy is found at the transition point…centre that is, it’s the point of cell division and that of splitting atoms, and the place we find it hardest to hang-out as humans.
If we want to find dynamic balance now, in the midst of our own upcoming destruction, then we must talk about all aspects at once, and solve each using the same technique.
Balance isn’t natural. So, if we are to find it, it’ll take a whole load of gutsy muscle and a will - not to fall too-far either way.
And I have to mention the caveat: if one does happen to fall too far, it’ll take additional gutsy muscles to pull one back to dynamism. Too much and….
Bloody politics
I like the analogy!
Reading your opening paragraph, I thought I was reading the lyrics to “Low Spark of High Heeled Boys!”
I normally don't care about what another person has, these rumors of the insider trading done by both regimes and 99% of congress make me want to (fed post).
Another way to frame the issue is the 'politics of envy' vs. the 'politics of greed.'
Envy requires very little effort, whereas greed requires a fair amount if you're going to have any success at it. In a democracy, the implication is that the majority will always vote to tax the rich because the rich are an envied minority, whether or not they got rich by greed, good luck or actually providing a valuable service. They are hated simply for being rich.
Try, the 'politics of justice'.
Isn't that what most politicians campaign on?
Only until the votes are counted.
Exactly!
Do you know that in Islam there is a yearly tax of 2.5% on the rich (called Zakat), and it is given to poor people?
What if we implemented this in our countries?
Charity is one of the 5 pillars of Islam and is obligatory on all who can afford it, not just the rich.
https://en.wikipedia.org/wiki/Zakat
There are online calculators available so you can determine what part of your income is subject to Zakat. I use this one when making my contributions which I spread out over the year, but typically Zakat is paid during Ramadan.
https://www.islamicreliefcanada.org/our-work/zakat_calculator
That’s a beautiful practice, and it's great that you use a calculator! Just a small, friendly clarification on how Islamic law defines 'rich' and 'income':
1. Who is 'Rich'? You are right that it's not just for billionaires. In Islamic law, anyone whose savings reach a minimum threshold (called Nisab, roughly the value of 85g of gold) is technically categorized as 'wealthy' and must pay.
2. Savings, not Income: Zakat is not an income tax. You don’t pay it on your monthly paycheck. You only pay Zakat on savings that have been held continuously for one full lunar year.
3. Timing: Paying in Ramadan is wonderful for the extra spiritual reward, but technically, Zakat is due on the exact date your accumulated savings complete one full lunar year, regardless of the month
Thanks for this information! I didn't know that one.
But this got me thinking... 85g of gold (yeah sorry, I'm a gold bug). That's like 3 coins, means you have around 15k of savings...
So that's either gold severely undervalued, or "rich" doesn't really mean "rich", but "able to save"?
You hit the nail on the head! You are absolutely right—in this specific context, 'rich' doesn't mean a multi-millionaire; it literally means 'able to save' or 'self-sufficient'. The Arabic word used is Ghani, which means 'free from need'. If you can hold onto ~85g of gold for a full year without needing it to pay for your basic survival (food, rent, debt), you are considered financially secure enough to help those who have nothing.
And since you are a gold bug, you will appreciate this detail: Islam also set a minimum threshold for Silver, which is exactly 595 grams. If you divide 595 by 85, you get an exact 7:1 ratio by weight! This threshold was established over 1400 years ago, which is astonishing because it perfectly aligns with the historical natural mining ratio of silver to gold in the Earth's crust. It reflects a deeply profound and historically stable monetary standard.
Hey thanks for clearing that up. I'm not Muslim, I just adopted the Zakat model since the charity I donate to is Islamic Relief, and using their calculator removes the guess work.
https://www.islamicreliefcanada.org/
You're very welcome! It’s wonderful that you find the Islamic Zakat system so practical and precise. Since you already appreciate the wisdom and fairness of its financial laws, I warmly invite you to look into the core message of Islam itself—the belief in One God. You might find its spiritual foundation just as beautiful and logical!
Thanks. I think we're both on the same page when it comes to One God. My point of reference is Christianity, although I have to admit I'm not very observant. I would describe myself as syncretic. Where something makes sense to me I adopt it.
The issue with the 'syncretic' approach—picking only what makes sense to us—is that human minds and opinions constantly change over time. What makes sense to you today might not tomorrow, and no two people will ever agree on the exact same 'mix'.
But the amazing thing is, if you deeply use your logic to examine Islam, it makes absolute perfect sense. It builds a society based on honesty, good morals, tolerance, and low crime—with the ultimate goal of eternal Paradise. I have honestly never seen a society quite like a true Islamic one.
On a personal level, I pray 5 times a day, and the peace it brings is indescribable. It’s like instant therapy for the heart. I genuinely don't know how some people live without it! The same goes for the fasting month of Ramadan; it brings this beautiful, internal spiritual happiness that is hard to put into words.
Islam also heavily commands honoring and serving parents. This is why you’ll almost never see nursing homes in our communities. Having my own elderly mother living with me and caring for her is a normal, blessed part of life, just as it is for virtually all Muslims. We care for them until their last breath.
One quick disclaimer, though: true Islam is strictly what the Prophet Muhammad and his early companions practiced. There are deviant sects and extreme groups out there (like ISIS, or sects like the Shia and Sufis) that the Prophet actually warned us about. They try to distort the image of Islam from the inside, and true Islam is completely innocent of them.
We sort of have that with food stamps, subsidized housing, various child tax credits, etc. It provides for a lot of government jobs.
I think that you'll find that the rich bastards' welfare state costs a lot more than the poor peoples' one.
That is correct
While welfare programs have a similar goal, Zakat is fundamentally different:
1. It taxes stagnant wealth, not income: It takes 2.5% from hoarded wealth, not from people's paychecks. This targets the truly rich without burdening the working class.
2. No bloated bureaucracy: It goes directly to strictly defined categories of needy people. It's a divine right for the poor, not a political favor or a tool to create government jobs.
Zakat varies from place to place. In some countries it's obligatory, in others voluntary. The taxable amounts also vary depending on the country and the interpretation of Koran.
There is a mix-up here between modern state laws and Islamic law (Sharia).
1. It is never voluntary: Zakat is the 3rd pillar of Islam. It is strictly obligatory on every eligible Muslim worldwide. If a specific government does not collect it, the individual is still religiously mandated to calculate and distribute it themselves. (Voluntary charity is a completely different concept called Sadaqah).
2. The rates are universally fixed: The taxable amounts and percentages (like 2.5% for cash, gold, and silver) do not vary by country, nor are they open to interpretation. They were strictly and precisely fixed by Prophet Muhammad (peace be upon him) over 1400 years ago, and no government or scholar has the authority to change them.
1. It is never voluntary: Zakat is the 3rd pillar of Islam.
Correct. What I meant is not all governments make it mandatory.
"Today, in most Muslim-majority countries, zakat contributions are voluntary, while in Libya, Malaysia, Pakistan, Saudi Arabia, Sudan and Yemen, zakat is mandated and collected by the state (as of 2015).[18][19]"
https://en.wikipedia.org/wiki/Zakat
The 2.5 is fixed, I agree, but you will find variations in the calculation. For example:
"Most contemporary scholars recommend using the silver nisab as it is more inclusive and benefits more Zakat recipients. However, some scholars prefer the gold nisab as it better represents meaningful wealth in today's economy. Our calculator displays both values with live prices so you can make an informed choice. The nisab you choose affects whether you're obligated to pay Zakat—if your total zakatable wealth exceeds the nisab and has been held for one lunar year (hawl), Zakat becomes due at 2.5% of your total wealth. Learn more on our detailed Nisab Guide."
https://www.zakat-calculator.net/en
By the way, just to add a quick piece of context—there are actually two completely different types of Zakat in Islam!
1. Zakat al-Mal (Zakat on Wealth): This is the one we’ve been discussing—the 2.5% on savings and assets held for a year, strictly for those who meet the wealth threshold.
2. Zakat al-Fitr (Zakat of Breaking the Fast): This one is totally different. It is paid once a year right at the end of Ramadan, before the holiday (Eid) prayer. It isn't a percentage of wealth, but rather a small, fixed amount of staple food (like rice, barley, or dates). The catch? Everyone has to pay it, rich or poor, as long as they have enough food for that single day. The goal is to make sure absolutely no one goes hungry during the community celebration.
Good catch.. You're totally right on how it plays out in the real world today.
Just two quick points on why that is:
1. Governments: If a modern state doesn't collect Zakat, the religious duty doesn't vanish. Individuals just have to calculate and hand it out themselves. Historically, the first Caliph (Abu Bakr) actually went to war against tribes that refused to pay it!
2. Gold vs. Silver: The calculator debate only exists because of modern paper money. The Prophet set strict limits for physical gold and silver. Since fiat cash is neither, modern scholars usually peg paper money to the silver threshold because its value is much lower right now. That brings more people into the paying bracket, which ultimately gets more money to the poor.
How do you define stagnant wealth? Most of the wealth the rich hold they hold in productive assets. They may be in a financial form, such as stock holdings; but they still represent ownership in productive assets (at least, one would hope they are productive).
I believe the problem here in the States is we have financialized our economy to far too large a degree, and most of what is called wealth is smoke and mirrors, electronic digits on a ledger. Another problem seems to be much of the "real" wealth, the wealth produced by what is needed, gets siphoned off by middle men and financiers, leading to greater concentration of said assets into fewer hands.
Some of us think that the more we allow a government to care for the needy, the more we dissolve the social bonds needed to provide for more local solutions to the problem of those in need.
I don't know if your solution would work here. We have too many factions, less social cohesion than we had even 40 or 50 years ago.
My comment about government jobs was a bit of sarcasm, by the way. I feel compelled to mention I retired from the post office, so maybe I should throw no stones. 🤔
You make excellent points. Here is how the Islamic system addresses them directly:
1. Productive Assets: Zakat does apply to stock portfolios, financial instruments, and business cash reserves. Physical machinery is exempt to encourage production, but circulating capital is taxed to keep wealth moving.
2. The 'Smoke & Mirrors' Economy: Islam completely agrees. This is exactly why it strictly forbids interest (Riba) and extreme speculation. It forces investments into the real economy, preventing middlemen from siphoning off true wealth.
3. Local Social Bonds: Zakat was designed to be intensely local. Historically, it is collected from a community's wealthy and given directly to that exact community's poor. It’s a personal duty that builds social cohesion, not a faceless government handout.
(And your post office sarcasm is well taken!)
Community, one thing that has changed over time here; not gone, but weaker. There is no one cause, but the one I would say was most important was the rise of inflation (excess money creation causing price rises that outstrip incomes.) Empires are very expensive. :-(
One of the first posts I have ever made: https://no01.substack.com/p/the-antisocial-social-contract
The "antisocial social contract"...
You have highlighted a profound truth. The link between inflation—which acts as a hidden tax that devalues people's hard work—and the erosion of community is undeniable. When individuals are forced into a constant state of financial survival, social bonds naturally fray.
Interestingly, Islamic economic principles address this exact issue. Historically, Islamic law mandated that money should have stable, intrinsic value (like gold and silver) to prevent authorities from arbitrarily expanding the money supply to fund their excessive spending (the 'empire' costs you mentioned). Manipulating currency to print money without backing causes inflation, which Islam prohibits as it is considered a form of unjustly consuming and stealing the wealth of the common people
It seems to me that the generation scheme of money getting more money, once one is in ""the club" is the root, and taxes just deal with the fruits.
Eliminating the unfair-playing field, really leveling it in terms of income generation at different levels of wealth, so that wealth does not automatically extract more wealth, immiserating wage-earners, is the fundamentally better project.
Compound interest and unmitigated creditors-rights are problematic to any society.
This idea makes some sense. Look at the drop in the share of income in the US going to labor (the alternative being the share of income going to capital) since the 1950's: https://fred.stlouisfed.org/series/PRS85006173
Technically, the above is for the "Non-farm business sector". For a discussion of the above bare bones chart: https://conversableeconomist.com/2024/05/21/declining-labor-share-measurement-and-causes/
You are absolutely right No 1! The issue I see is that most of our countrymen don’t give a damn about the corruption in our economy. They’re fine with big pharmaceutical companies getting legal immunity for their products (e.g., vaccines) and the “genius” Elon Musk getting rich since his customers were paid $7,500 in tax credits by the US Treasury for buying a Tesla. Look at the Mag 7 tech stocks, not one would have the market cap they do without government contracts. End the corruption and we might start to see some improvement.
Superb, as usual. Looking at the world today, the only solution appears to be for people of a sane mindset to start a new country. Because there’s no way on earth the existing countries can or will get out of the messes they’re in. There will be lots of sound and fury, “we’re going to do this” and “we’re going to do that,” as way down they continue to go.
Who's John Galt?
You're spot on that the tax the rich thingy would be better spent fighting the socialized losses but privatized gains syndrome.
At the same time, i can't feel anything but weirdness to know that a guy like Elon is a trillionaire whilst others earn 1$ a day elsewhere in the world.
No amount of creativity / ingeniosity, risk taking is worth such extreme imbalance
Partially true, however Musk also lived under his desk many times when starting up a company and he put his heart and soul in it.
And yes, he's one of the successful ones... I think he's about as close as you can get to a hard working person that had his bets pay off...
At the same time you're right. He could sustain whole countries just by the interest on the money (if it'd be in the bank).
The rich are the visible signs of rental incomes of corporations that have set up legislation to ensure their monopoly and cartel status. Australia has the highest concentration of market power - every sector dominated by 2-4 companies, and the stagnation and squeezing shows. Eg Telstra ensures internet and mobile bills constantly rise, even as their costs decline, and Visa collects %1.5 of every card transaction, a new tax.
Increasing competition is every rental income company's weak spot.
China regularly disappears billionaires like Jack Ma, who reappear months later apologising for their greed and obscene wealth, and loopholes or semi-legal areas their companies have been taking advantage of closed. This adhoc approach acknowledges that laws cannot stop corporations and capitals from finding workarounds, and is hard to defend against by billionaires.