60 Pages Posted: 2 Mar 2009 Last revised: 9 Jan 2011
Date Written: 2009
The rapid development of complex income taxation and welfare systems in the 20th century may give the impression that progressive wealth redistribution systems are uniquely modern. However, religious systems provided similar mechanisms for addressing economic injustice and poverty alleviation centuries earlier. Zakat is the obligation of almsgiving and is the third pillar of Islam - a requirement for all believers. In the early development of the Islamic community, zakat was collected as a tax by the state and the funds were distributed to a defined set of needy groups. As a theoretical matter, there are three insights that make zakat an especially relevant subject for modern legal scholars. First, zakat is an example of a modest wealth tax combined with an income tax that may be illustrative in the discourse regarding wealth taxes. Second, the jurisprudence of zakat supports the ethical conclusions of scholars who contend that property rights are attached to post rather than pre-tax income. Third, to the extent that zakat is considered a principal source of revenue for public programs, it might imply a limited role for government, focusing on equitable distribution of goods. This paper begins with a thorough evaluation and synthesis of the traditional Islamic jurisprudence related to zakat. The next section identifies three broad approaches to zakat adopted by modern Muslim states, with particular emphasis on ways that zakat is institutionalized legally. This is followed by an empirical analysis of the correlation of the approaches to zakat with (1) individual income and (2) wealth stratification. The article concludes with observations and policy recommendations related to zakat and broader legal theory based on the earlier qualitative analysis and empirical findings.
Keywords: Islam, Comparative, International, Jurisprudence, Economics, Tax, Benefits, Welfare, Wealth Tax, Law and Economics, Social Justice, Distribution
JEL Classification: D31, H21, H53, K00, K33, K34, P51
Suggested Citation: Suggested Citation
Powell, Russell, Zakat: Drawing Insights for Legal Theory and Economic Policy from Islamic Jurisprudence (2009). University of Pittsburgh Tax Review, Vol. 7, No. 43, 2009; Seattle University School of Law Research Paper No. 10-17. Available at SSRN: https://ssrn.com/abstract=1351024