Charity Disparity: The Challenge of Applying Religious Law on Zakat in the United States

Abstract

Legal pluralism is “generally defined as a situation in which two or more legal systems coexist in the same social field.” One type of legal pluralism occurs when a group of people is subject to both the law of its country and to a religious law. Practicing Muslims in the United States are in this situation — they must fulfill numerous personal obligations imposed by Islamic law within the context of the American legal system. Doing so is usually not difficult; however, it causes significant problems in at least one area: calculating their annual almsgiving (zakat) required by Islamic law. Muslim jurists disagree about how much zakat should be paid on certain modern financial assets created by American corporate, securities, and tax law, such as publicly traded stocks and 401(k) retirement accounts. As a result, American Muslims can choose from a wide range of zakat calculation opinions, which are usually presented on the internet without a framework of legal reasoning. This causes inequity, confusion, and creates a moral hazard for American Muslims that threatens to undermine the societal and spiritual purposes of zakat.

Keywords: religion, charity, Zakat, legal pluralism, internet, Muslims, American Muslims, Islam

JEL Classification: D12