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Tax Experiment

YassineB
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3/17/2015 1:14:16 PM
Posted: 1 year ago
This is a thought experiment where I'll be attempting to apply Islamic Tax System (Zakat) on the US, & see what I get. Zakat is a fundamentally social Tax System, & thus inherently incompatible with the US, nonetheless, I thought it would be interesting to compare the two Formulas.

.

- Zakat Rates (very general & simplistic look):

1. Zakat on Harvest. => 2.5% to 10% of Crops.
2. Zakat on Livestock. => ~2.5% of Heads.
3. Zakat on Coins. => 2.5 % of Personal Savings (over ~$3,000).
4. Zakat on Commerce. => 2.5 % of Profitable Assets.
5. Zakat on Minerals. => 100% of Revenue.
6. Zakat on Treasures. => 20% of Value.

- This formula does not include the Kharaj & Jizyah (Taxes initially directed at non-muslims). In this particular analogy, these will be assumed for non-citizens in the US:

7. Jizyah. => 1 to 2 Dinar ($160 to $320) for every able adult male, per year.

.

- US Tax Receipts (2014):

> Individual Income = $1,395bn.
> Payroll = $1,024bn.
> Corporate Income = $321bn.
> Other = $282bn.
( http://en.wikipedia.org... )

=> Total = $3,021bn.

.

- Attempted Zakat Receipts:

3. => Savings deposits at all depository institutions in the U.S. 2013 = ~$7.2tr >>> 2.5% = ~$180bn.
( http://www.statista.com... )

4. => Total Assets in All Sectors (minus Nonprofit, minus Minerals) = ~$117tr >>> 2.5% = ~$2,900bn.
( http://rutledgecapital.com... )

5. => Revenue Oil, Gas, Mines = ~$1.5tr >>> 100% = ~$1,500bn.
( http://www.statista.com... )

7. => Number of male Non-Citizens = ~5 millions >>> Jizyah = $1.6bn.
( http://www.pbs.org... )

=> Total = ~$4,580bn.

.

- I am pretty sure I messed up somewhere, so please do engage in the discussion, & tell me what you think.
Current Debates In Voting Period:

- The Qur'an We Have Today is Not What Muhammad Dictated Verbatim. Vs. @Envisage:
http://www.debate.org...

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"It is perfectly permissible to vote on sources without reading them" bluesteel.
ResponsiblyIrresponsible
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3/17/2015 8:11:24 PM
Posted: 1 year ago
This is really cool...I'm going to have to sit down and sort through this at some point, lol.
~ResponsiblyIrresponsible

DDO's Economics Messiah
YassineB
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3/17/2015 8:58:23 PM
Posted: 1 year ago
At 3/17/2015 8:11:24 PM, ResponsiblyIrresponsible wrote:
This is really cool...I'm going to have to sit down and sort through this at some point, lol.

- I see you do Economics, so I would love to hear your input.
Current Debates In Voting Period:

- The Qur'an We Have Today is Not What Muhammad Dictated Verbatim. Vs. @Envisage:
http://www.debate.org...

- Drawing Contest. Vs. @purpleduck:
http://www.debate.org...

"It is perfectly permissible to vote on sources without reading them" bluesteel.
YassineB
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3/19/2015 3:10:49 AM
Posted: 1 year ago
- bump.
Current Debates In Voting Period:

- The Qur'an We Have Today is Not What Muhammad Dictated Verbatim. Vs. @Envisage:
http://www.debate.org...

- Drawing Contest. Vs. @purpleduck:
http://www.debate.org...

"It is perfectly permissible to vote on sources without reading them" bluesteel.
wrichcirw
Posts: 11,196
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3/26/2015 5:15:51 AM
Posted: 1 year ago
At 3/17/2015 1:14:16 PM, YassineB wrote:
This is a thought experiment where I'll be attempting to apply Islamic Tax System (Zakat) on the US, & see what I get. Zakat is a fundamentally social Tax System, & thus inherently incompatible with the US, nonetheless, I thought it would be interesting to compare the two Formulas.

[etc]

- Attempted Zakat Receipts:

3. => Savings deposits at all depository institutions in the U.S. 2013 = ~$7.2tr >>> 2.5% = ~$180bn.
( http://www.statista.com... )

4. => Total Assets in All Sectors (minus Nonprofit, minus Minerals) = ~$117tr >>> 2.5% = ~$2,900bn.
( http://rutledgecapital.com... )

5. => Revenue Oil, Gas, Mines = ~$1.5tr >>> 100% = ~$1,500bn.
( http://www.statista.com... )

7. => Number of male Non-Citizens = ~5 millions >>> Jizyah = $1.6bn.
( http://www.pbs.org... )

=> Total = ~$4,580bn.

.

- I am pretty sure I messed up somewhere, so please do engage in the discussion, & tell me what you think.

A 2.5% "tax" on all savings deposits (as opposed to a tax on interest earned) is extremely high. It's far higher than property taxes on real estate throughout America. This one tax on wealth as opposed to income would probably meet enormous resistance.

I suppose you can say it encourages investment of savings (since it seems only monetary forms of wealth are taxed) but that could just encourage malinvestment. It's interesting though that a tax on monetary assets produced so little actual tax.

Still, your tax proposal would destroy the US banking system, or at the very least add a 2.5% rate of inflation on top of all interest rates on savings, to include CDs, many of which have been yielding around 1% annually for at least 7 years now. Either that, or people would just find ways to keep their savings undocumented...which in a fractional reserve banking system is highly deflationary and would cause all kinds of problems in the system.

Generally speaking, US taxes tax income, not asset base. You make a very interesting point though...IMHO modern economics tends to try to obfuscate/discourage aggregate/total wealth statistics. Such obfuscation is problematic, although to make your proposal work you'd have to insist that people make public their asset bases every year for tax purposes. I suppose that would make people more honest. A problem would arise from pricing stock market assets and other volatile commodities...I don't see this being easy to ameliorate.

Finally, your proposal would make sense in a caste-system society or some other form of landed-elite style society, but in a (ostensibly) meritocratic one like the US, taxing income makes more sense. Of course, then you could argue that maybe the US is not a meritocracy, and is actually a landed-elite style society...apparently the 1% already pay 40% of income taxes... O_o
http://taxfoundation.org...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/26/2015 9:07:48 PM
Posted: 1 year ago
At 3/26/2015 5:15:51 AM, wrichcirw wrote:

- Thanks for the input.

A 2.5% "tax" on all savings deposits (as opposed to a tax on interest earned) is extremely high. It's far higher than property taxes on real estate throughout America. This one tax on wealth as opposed to income would probably meet enormous resistance.

- It would, certainly in a capitalist society such as the US. As I said, the Zakat is basically socially oriented. If you can save up over 3,000$ per year, then you're eligible to pay the Zakat. So, the more money you save, the more Zakat you have to pay, with equal proportion.
- Besides, in a real Islamic country, there would be no interests on savings to begin with. The purpose here is a eliminate the cumulation of wealth & to spread it through all levels of the society.
- Another analogue example is Islamic Inheritance Law, & one of its purposes is to eliminate the cumulation of wealth through generations. That is to say, Inheritance Law is designed in a way that inevitably breaks any wealth into little pieces for the benefit of the inheritors., & thus obscene wealth can never cumulate into one person.

I suppose you can say it encourages investment of savings (since it seems only monetary forms of wealth are taxed) but that could just encourage malinvestment. It's interesting though that a tax on monetary assets produced so little actual tax.

- There is no Income Tax in Zakat, you can spend as much as you want, no problem, but once you start saving, as you clearly put it, you have to 'invest' or give back a portion for the good of the society.
- To elaborate, a person can spent as much money as he wants, can have as many houses as he wants, can have as many cars or furnitures as he wants, as long as he doesn't use them for commercial or beneficiary purposes, & all that without paying a single dime of Zakat. However, beyond one's spendings, all else is considered savings, & thus warrants Taxation.

Still, your tax proposal would destroy the US banking system

- That's the whole point :P.

or at the very least add a 2.5% rate of inflation on top of all interest rates on savings, to include CDs, many of which have been yielding around 1% annually for at least 7 years now. Either that, or people would just find ways to keep their savings undocumented...which in a fractional reserve banking system is highly deflationary and would cause all kinds of problems in the system.

- It's a long stretch, for actual muslims, it would be a lot easier. Paying Zakat is one of the Five Pillars of Islam, & thus one of the strictest religious obligations on muslims. However, in a secular system, to insure the same amount of honesty, there must be a whole legal procedural system that goes with it, with penalties & such. Or the government can just force banks to pay the 2.5% by some Law or something.

Generally speaking, US taxes tax income, not asset base. You make a very interesting point though...IMHO modern economics tends to try to obfuscate/discourage aggregate/total wealth statistics. Such obfuscation is problematic, although to make your proposal work you'd have to insist that people make public their asset bases every year for tax purposes. I suppose that would make people more honest.

- Not necessarily, if the banks deduct the amount of Zakat automatically from your account, as they do Taxes & such, there will be no need to declare any wealth publicly.

A problem would arise from pricing stock market assets and other volatile commodities...I don't see this being easy to ameliorate.

- You have to think about this situation as a hypothetical one, if ever a system like that or similar to it is installed, it will surely be accompanied with its own brand & branch of economics with all the Math & Laws that go with it.

Finally, your proposal would make sense in a caste-system society or some other form of landed-elite style society, but in a (ostensibly) meritocratic one like the US, taxing income makes more sense.

- Why is that?
- I would definitely disagree, the Islamic Social, Political, Economic, Financial, Legal System is largely (likely entirely) meritocratic, & it is seamlessly compatible with Zakat, for obvious reasons. Why do you think otherwise?

Of course, then you could argue that maybe the US is not a meritocracy, and is actually a landed-elite style society...apparently the 1% already pay 40% of income taxes... O_o
http://taxfoundation.org...

- America is becoming more & more extreme, 'socialist' from one side, & 'capitalist' from another. I don't understand it anymore.
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Islam is not a religion of peace vs. @ Lutonator:
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wrichcirw
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3/27/2015 1:43:23 PM
Posted: 1 year ago
At 3/26/2015 9:07:48 PM, Yassine wrote:
At 3/26/2015 5:15:51 AM, wrichcirw wrote:

- Thanks for the input.

A 2.5% "tax" on all savings deposits (as opposed to a tax on interest earned) is extremely high. It's far higher than property taxes on real estate throughout America. This one tax on wealth as opposed to income would probably meet enormous resistance.

- It would, certainly in a capitalist society such as the US. As I said, the Zakat is basically socially oriented. If you can save up over 3,000$ per year, then you're eligible to pay the Zakat. So, the more money you save, the more Zakat you have to pay, with equal proportion.
- Besides, in a real Islamic country, there would be no interests on savings to begin with. The purpose here is a eliminate the cumulation of wealth & to spread it through all levels of the society.
- Another analogue example is Islamic Inheritance Law, & one of its purposes is to eliminate the cumulation of wealth through generations. That is to say, Inheritance Law is designed in a way that inevitably breaks any wealth into little pieces for the benefit of the inheritors., & thus obscene wealth can never cumulate into one person.

I suppose you can say it encourages investment of savings (since it seems only monetary forms of wealth are taxed) but that could just encourage malinvestment. It's interesting though that a tax on monetary assets produced so little actual tax.

- There is no Income Tax in Zakat, you can spend as much as you want, no problem, but once you start saving, as you clearly put it, you have to 'invest' or give back a portion for the good of the society.
- To elaborate, a person can spent as much money as he wants, can have as many houses as he wants, can have as many cars or furnitures as he wants, as long as he doesn't use them for commercial or beneficiary purposes, & all that without paying a single dime of Zakat. However, beyond one's spendings, all else is considered savings, & thus warrants Taxation.

Still, your tax proposal would destroy the US banking system

- That's the whole point :P.

or at the very least add a 2.5% rate of inflation on top of all interest rates on savings, to include CDs, many of which have been yielding around 1% annually for at least 7 years now. Either that, or people would just find ways to keep their savings undocumented...which in a fractional reserve banking system is highly deflationary and would cause all kinds of problems in the system.

- It's a long stretch, for actual muslims, it would be a lot easier. Paying Zakat is one of the Five Pillars of Islam, & thus one of the strictest religious obligations on muslims. However, in a secular system, to insure the same amount of honesty, there must be a whole legal procedural system that goes with it, with penalties & such. Or the government can just force banks to pay the 2.5% by some Law or something.

Generally speaking, US taxes tax income, not asset base. You make a very interesting point though...IMHO modern economics tends to try to obfuscate/discourage aggregate/total wealth statistics. Such obfuscation is problematic, although to make your proposal work you'd have to insist that people make public their asset bases every year for tax purposes. I suppose that would make people more honest.

- Not necessarily, if the banks deduct the amount of Zakat automatically from your account, as they do Taxes & such, there will be no need to declare any wealth publicly.

A problem would arise from pricing stock market assets and other volatile commodities...I don't see this being easy to ameliorate.

- You have to think about this situation as a hypothetical one, if ever a system like that or similar to it is installed, it will surely be accompanied with its own brand & branch of economics with all the Math & Laws that go with it.

Finally, your proposal would make sense in a caste-system society or some other form of landed-elite style society, but in a (ostensibly) meritocratic one like the US, taxing income makes more sense.

- Why is that?
- I would definitely disagree, the Islamic Social, Political, Economic, Financial, Legal System is largely (likely entirely) meritocratic, & it is seamlessly compatible with Zakat, for obvious reasons. Why do you think otherwise?

Of course, then you could argue that maybe the US is not a meritocracy, and is actually a landed-elite style society...apparently the 1% already pay 40% of income taxes... O_o
http://taxfoundation.org...

- America is becoming more & more extreme, 'socialist' from one side, & 'capitalist' from another. I don't understand it anymore.

I suppose most of what you say is different, but not necessarily better or worse. You make some very interesting arguments for it, and I can see what you mean that there would be in place different institutions to enact such a tax. I very much like your advocacy of merit and how your system would seek to ameliorate concerns stemming from inherited wealth.

On your final comment, I would consider the extremity you note to be an issue not necessarily stemming from socialist/capitalist, but rather stemming from inherited wealth. A lot of money in the US is tied to people who don't know how to make money with it, and just sit on it and don't take risks...after all, why would they, when their money will just grow on its own? I don't know if you've heard of Jamie Johnson's documentary, the One Percent...it goes into this issue in some very interesting detail. I think the movie is actually free to view on youtube...yep, here it is https://www.youtube.com...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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3/27/2015 8:18:11 PM
Posted: 1 year ago
At 3/26/2015 9:07:48 PM, Yassine wrote:
At 3/26/2015 5:15:51 AM, wrichcirw wrote:

- To elaborate, a person can spent as much money as he wants, can have as many houses as he wants, can have as many cars or furnitures as he wants, as long as he doesn't use them for commercial or beneficiary purposes, & all that without paying a single dime of Zakat. However, beyond one's spendings, all else is considered savings, & thus warrants Taxation.

Just to get some clarification, wouldn't someone's cars and houses and furniture be considered "assets" and thus taxable?

4. => Total Assets in All Sectors (minus Nonprofit, minus Minerals) = ~$117tr >>> 2.5% = ~$2,900bn.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/27/2015 8:36:04 PM
Posted: 1 year ago
At 3/27/2015 1:43:23 PM, wrichcirw wrote:
I suppose most of what you say is different, but not necessarily better or worse.

- It depends on the purpose of the System, its Morality, Pragmatism . . .

You make some very interesting arguments for it, and I can see what you mean that there would be in place different institutions to enact such a tax. I very much like your advocacy of merit and how your system would seek to ameliorate concerns stemming from inherited wealth.

- What do you personally think about the nature of Capitalism & Disparity of Wealth?

On your final comment, I would consider the extremity you note to be an issue not necessarily stemming from socialist/capitalist, but rather stemming from inherited wealth. A lot of money in the US is tied to people who don't know how to make money with it, and just sit on it and don't take risks...after all, why would they, when their money will just grow on its own? I don't know if you've heard of Jamie Johnson's documentary, the One Percent...it goes into this issue in some very interesting detail. I think the movie is actually free to view on youtube...yep, here it is https://www.youtube.com...

- I took a look at the documentary, the guy is crazy, he is rich & making a documentary against rich people, ironic!
- As you said, a lot of money is just setting there doing nothing, while millions can't have access to it. & I think Taxing Assets will surely constitute a solution to that problem.
Current Debates:

Islam is not a religion of peace vs. @ Lutonator:
* http://www.debate.org...
Yassine
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3/27/2015 10:04:53 PM
Posted: 1 year ago
At 3/27/2015 8:18:11 PM, wrichcirw wrote:
Just to get some clarification, wouldn't someone's cars and houses and furniture be considered "assets" and thus taxable?

- 'Profitable Assets' are taxed, not 'Assets'.

- There is a lot of details I didn't mention, obviously. Zakat is a sub-brunch of Islamic Law, & thus can't fit in a Forum discussion!

- The Assets that pertain to any of the following are not taxed:
> The mandatory expenses: including Medication, Education, Furniture, Sustenance. . .
> Jewellery: gold & such, unless used for the purpose of saving wealth, or used for commercial purposes.
> Gems: diamonds & such, unless used for commercial purposes.
> Habitation: houses, shelters & such, unless used for commercial purposes (renting, leasing. . .).
> Transport: cars, boats, horses & such, unless used for commercial purposes.
> Factories: for real products, unless used for commercial purposes.
> Fruits & Vegetables: crops, gardens & such, unless used for commercial purposes.
> Animals: beside livestock (cattle & such), unless used for commercial purposes.

=> So you can own as much as you want of the above without being taxed. If you exploit any of these assets commercially, then what you save up from the gains you make (& if those savings exceed 3,000$) should be taxed by a 2.5% rate.

- I am not too sure if I am being clear here, please don't hesitate to ask if you still don't get it.
Current Debates:

Islam is not a religion of peace vs. @ Lutonator:
* http://www.debate.org...
wrichcirw
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3/28/2015 2:58:38 AM
Posted: 1 year ago
At 3/27/2015 10:04:53 PM, Yassine wrote:
At 3/27/2015 8:18:11 PM, wrichcirw wrote:
Just to get some clarification, wouldn't someone's cars and houses and furniture be considered "assets" and thus taxable?

- 'Profitable Assets' are taxed, not 'Assets'.

- There is a lot of details I didn't mention, obviously. Zakat is a sub-brunch of Islamic Law, & thus can't fit in a Forum discussion!

- The Assets that pertain to any of the following are not taxed:
> The mandatory expenses: including Medication, Education, Furniture, Sustenance. . .
> Jewellery: gold & such, unless used for the purpose of saving wealth, or used for commercial purposes.
> Gems: diamonds & such, unless used for commercial purposes.
> Habitation: houses, shelters & such, unless used for commercial purposes (renting, leasing. . .).
> Transport: cars, boats, horses & such, unless used for commercial purposes.
> Factories: for real products, unless used for commercial purposes.
> Fruits & Vegetables: crops, gardens & such, unless used for commercial purposes.
> Animals: beside livestock (cattle & such), unless used for commercial purposes.

=> So you can own as much as you want of the above without being taxed. If you exploit any of these assets commercially, then what you save up from the gains you make (& if those savings exceed 3,000$) should be taxed by a 2.5% rate.

- I am not too sure if I am being clear here, please don't hesitate to ask if you still don't get it.

This really sounds like it would actually exacerbate inheritance issues. Most people in America already use their home as a primary tax shelter, if you add all that other stuff to your non-taxable list then a lot of people with wealth will escape tax altogether. I mean, what's to stop someone from declaring some jewelry collection as being "for personal use" instead of for savings?

It would also discourage productive activity, as it's the only activity being taxed.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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3/28/2015 3:02:12 AM
Posted: 1 year ago
At 3/27/2015 8:36:04 PM, Yassine wrote:
At 3/27/2015 1:43:23 PM, wrichcirw wrote:
I suppose most of what you say is different, but not necessarily better or worse.

- It depends on the purpose of the System, its Morality, Pragmatism . . .

You make some very interesting arguments for it, and I can see what you mean that there would be in place different institutions to enact such a tax. I very much like your advocacy of merit and how your system would seek to ameliorate concerns stemming from inherited wealth.

- What do you personally think about the nature of Capitalism & Disparity of Wealth?

Wealth disparity is a natural outcome of any meritocracy. Capitalism is a decent system for determining merit, as long as inheritance issues don't play too big a role in such a system.

On your final comment, I would consider the extremity you note to be an issue not necessarily stemming from socialist/capitalist, but rather stemming from inherited wealth. A lot of money in the US is tied to people who don't know how to make money with it, and just sit on it and don't take risks...after all, why would they, when their money will just grow on its own? I don't know if you've heard of Jamie Johnson's documentary, the One Percent...it goes into this issue in some very interesting detail. I think the movie is actually free to view on youtube...yep, here it is https://www.youtube.com...

- I took a look at the documentary, the guy is crazy, he is rich & making a documentary against rich people, ironic!
- As you said, a lot of money is just setting there doing nothing, while millions can't have access to it. & I think Taxing Assets will surely constitute a solution to that problem.

Well that money is doing "something"...it is being invested one way or another. The thing is, the people who own that money didn't earn it...obviously people who would have earned that money would be much more astute about how to make more money with it.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/28/2015 7:40:46 AM
Posted: 1 year ago
At 3/28/2015 2:58:38 AM, wrichcirw wrote:
- The Assets that pertain to any of the following are not taxed:
> The mandatory expenses: including Medication, Education, Furniture, Sustenance. . .
> Jewellery: gold & such, unless used for the purpose of saving wealth, or used for commercial purposes.
> Gems: diamonds & such, unless used for commercial purposes.
> Habitation: houses, shelters & such, unless used for commercial purposes (renting, leasing. . .).
> Transport: cars, boats, horses & such, unless used for commercial purposes.
> Factories: for real products, unless used for commercial purposes.
> Fruits & Vegetables: crops, gardens & such, unless used for commercial purposes.
> Animals: beside livestock (cattle & such), unless used for commercial purposes.

- In case I wasn't clear:
> when I said: "beside livestock", I meant 'aside from livestock' ; I am not too sure if the two expressions coincide or not! Livestock is taxed, but Animals other than livestock aren't (such as horses, donkeys, & so on & so forth).

=> So you can own as much as you want of the above without being taxed. If you exploit any of these assets commercially, then what you save up from the gains you make (& if those savings exceed 3,000$) should be taxed by a 2.5% rate.

- I am not too sure if I am being clear here, please don't hesitate to ask if you still don't get it.

This really sounds like it would actually exacerbate inheritance issues. Most people in America already use their home as a primary tax shelter, if you add all that other stuff to your non-taxable list then a lot of people with wealth will escape tax altogether.

- Actually the opposite is true. The point of Zakat is not to impede the spendings of people in their lifestyles, it's to profit from the excess money outside their lifestyle, for the benefit of the less fortunate. If you're poor, then you're exempt. if you're middle class, then you get to spend according to your lifestyle, & what you save up (if it's over 3,000$) you should give a little of it back (2.5%). If you are rich, then you also get to spend your money according to your rich lifestyle, & what remains (the wealth over 3,000$, which is supposed to be considerable in this case), you should give some of it back (2.5%).

- Now, in the US, if the rich really spent their money on houses & cars & gardens more freely, they'll get the economy growing, & thus more jobs for the rest. Basically, they'll be pouring their money outside of their pockets, instead of the opposite. In case they decide not to do that, then they'll have to pay the tax for the money they keep to themselves.

- Another thing I didn't mention is Extravagance. Extravagance is a Sin in Islam, & it is legally punishable by al-Hajr (legally limiting someone's capacity of spending, by rendering all his transactions void, & placing him under guardianship). So when I said you can have as many cars or houses as you want, I meant to a reasonable degree. Extravagance is decided by the Judge according to the Normative Standards, Waste, & Need.
> Normative Standards: how much one should normally spend if one has the same amount of money.
> Waste: what is not exploited in one's assets, as opposed to what is.
> Need: the value of the assets as opposed to their utility.
=> Once the case of Extravagance is established against the rich extravagant, he'll be considered a Safih (Incompetent, incapable of properly managing his wealth), & thus will lose his right to his wealth, & can only spend what the Judge tells him to spend, under a guardian.

- As for the Inheritance Issue you mentioned, Inherited wealth is also taxed under the condition that it amounts to over 3,000$ after one year of its distribution. So, inheritors are giving a chance to enjoy their new money, but once the year passes, it becomes taxed, unless it pertains to any of the above Assets (houses & such).
- In Inheritance Law, there are 25 types of Inheritors. For example: 'the Son' is 1 type, including: the sons, the sons of the sons, & so on. Point being, any Wealth is guaranteed to be split into little pieces over every generation.
=> I don't see how there would be Inheritance Issues.

- Regardless, I am sure if such a System was to be implemented, the government will find a way to get the rich no matter what.

I mean, what's to stop someone from declaring some jewelry collection as being "for personal use" instead of for savings?

- You're right, nothing! You can call it a code of honour. However you should take into consideration three things:
> One: Jewellery is only allowed for Women. So, only Women can actually make such a declaration.
> Two: Extravagance is prohibited, & thus owning too much Jewellery warrants owning none at all, for one would lose his right to his wealth in that case, including the Jewellery.
> Three: there isn't enough Gold out there to accommodate the wealth of rich people, not by a veeeeery long shot. If you're really rich, at maximum you can manage to transform 1% of your wealth to Jewellery, so, what about the rest?!

It would also discourage productive activity, as it's the only activity being taxed.

- Not quite. Owning houses & cars & gardens & such IS a productive activity, for building, acquiring, maintaining . . . these things generates a great flow of economy & jobs, & forces the rich to pour their money elsewhere other than in their own pockets.
- The idea is that Money must circulate, & shouldn't cumulate, & that what is profitable should be shared (Zakat profits from what is profitable): If you have Profitable Assets, you're expected to make over 2.5% Revenue on them per year, as to give back the 2.5% & keep the rest. If you have Crops (excluding Fruits & Vegetables), then you'll have to give from 2.5% to 10% back (depending on the method of Harvest). If you have Livestock, the same thing. . . etc. Profit & Share.
- For instance, if someone owns a land but isn't willing to or capable of cultivating it, he is legally forced to lend it to someone else, free of charge.

- There are exceptions to the rule of Profitable Assets, & those are:
1. al-Awq'af: is a sort of inalienable property, once established, can never be terminated, permanently. & it's owned by whoever fits the conditions on which it was established. Example: Mosques (always), Schools, Hospitals, Orphanage . . . For instance, the entire Meccan region inside the Forbidden Circle is Waq'fia.
2. Marafiq' al-Jama'a: group property, including Water (except privately owned wells), Fuel & Grass.
3. al-Milkyah al-'Amma: public property, including Roads, Rivers, Seas. . .
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Yassine
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3/28/2015 7:47:49 AM
Posted: 1 year ago
At 3/28/2015 3:02:12 AM, wrichcirw wrote:
At 3/27/2015 8:36:04 PM, Yassine wrote:
At 3/27/2015 1:43:23 PM, wrichcirw wrote:
I suppose most of what you say is different, but not necessarily better or worse.

- It depends on the purpose of the System, its Morality, Pragmatism . . .

You make some very interesting arguments for it, and I can see what you mean that there would be in place different institutions to enact such a tax. I very much like your advocacy of merit and how your system would seek to ameliorate concerns stemming from inherited wealth.

- What do you personally think about the nature of Capitalism & Disparity of Wealth?

Wealth disparity is a natural outcome of any meritocracy. Capitalism is a decent system for determining merit, as long as inheritance issues don't play too big a role in such a system.

- Don't you think that it Wealth has really less to do with Merit than with Circumstance. I mean a lot of people merit being rich, but aren't, as opposed to less capable ones.
- Shouldn't the people that were giving the chance of better lives give something in return?

Well that money is doing "something"...it is being invested one way or another. The thing is, the people who own that money didn't earn it...obviously people who would have earned that money would be much more astute about how to make more money with it.

- That's exactly my Point. The Money isn't circulating, it's just sitting there, growing (or not), thus doing nothing.
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wrichcirw
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3/28/2015 8:09:45 AM
Posted: 1 year ago
At 3/28/2015 7:47:49 AM, Yassine wrote:
At 3/28/2015 3:02:12 AM, wrichcirw wrote:
At 3/27/2015 8:36:04 PM, Yassine wrote:
At 3/27/2015 1:43:23 PM, wrichcirw wrote:
I suppose most of what you say is different, but not necessarily better or worse.

- It depends on the purpose of the System, its Morality, Pragmatism . . .

You make some very interesting arguments for it, and I can see what you mean that there would be in place different institutions to enact such a tax. I very much like your advocacy of merit and how your system would seek to ameliorate concerns stemming from inherited wealth.

- What do you personally think about the nature of Capitalism & Disparity of Wealth?

Wealth disparity is a natural outcome of any meritocracy. Capitalism is a decent system for determining merit, as long as inheritance issues don't play too big a role in such a system.

- Don't you think that it Wealth has really less to do with Merit than with Circumstance. I mean a lot of people merit being rich, but aren't, as opposed to less capable ones.

The underlined doesn't make sense. I think wealth, and money in general, is what you want it to be. In some societies, a lot of wealth equates to a "rich" bloodline, in others, a lot of wealth indicates a self-made individual.

- Shouldn't the people that were giving the chance of better lives give something in return?

That's the thing...no one "should" be "given" a better life...they should have to earn it. That's the whole point behind a meritocratic system.

Well that money is doing "something"...it is being invested one way or another. The thing is, the people who own that money didn't earn it...obviously people who would have earned that money would be much more astute about how to make more money with it.

- That's exactly my Point. The Money isn't circulating, it's just sitting there, growing (or not), thus doing nothing.

Well, the money is circulating...it's sitting in banks and banks are using it as a reserve to lend out, or its sitting in stocks and corporate management is using that capital to whatever end. That's not the issue...the issue deals with the competence of the owner of that wealth, whether or not that owner is actually capable of allocating that capital in the "best" manner possible ("best" being either most profitable or most socially beneficial, take your pick). Just having competent managers is not enough if the owner is making terrible decisions...it's like handing someone a can of paint and asking them to paint a cruise ship.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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3/28/2015 8:23:23 AM
Posted: 1 year ago
At 3/28/2015 7:40:46 AM, Yassine wrote:
At 3/28/2015 2:58:38 AM, wrichcirw wrote:

- Now, in the US, if the rich really spent their money on houses & cars & gardens more freely, they'll get the economy growing, & thus more jobs for the rest. Basically, they'll be pouring their money outside of their pockets, instead of the opposite. In case they decide not to do that, then they'll have to pay the tax for the money they keep to themselves.

Ok, this hits on a key concept of macroeconomics, C + I + G + (Ex - Im), essentially there are these sectors of economic activity - consumption, investment, government spending, and net import/exports.

What you're saying is that consumption fuels economic activity, and yes, you're right...but it doesn't grow the economy. Investment, and only investment, does that. It's like the difference between putting gas in your car (consumption), and building a better engine for your car (investment). Both are necessary, but I hope you can see that investment is what is far more important in the long run.

Your interpretation of Islamic tax law discourages investment in favor of consumption.

- Another thing I didn't mention is Extravagance. Extravagance is a Sin in Islam, & it is legally punishable by al-Hajr (legally limiting someone's capacity of spending, by rendering all his transactions void, & placing him under guardianship). So when I said you can have as many cars or houses as you want, I meant to a reasonable degree. Extravagance is decided by the Judge according to the Normative Standards, Waste, & Need.

> Normative Standards: how much one should normally spend if one has the same amount of money.
> Waste: what is not exploited in one's assets, as opposed to what is.
> Need: the value of the assets as opposed to their utility.
=> Once the case of Extravagance is established against the rich extravagant, he'll be considered a Safih (Incompetent, incapable of properly managing his wealth), & thus will lose his right to his wealth, & can only spend what the Judge tells him to spend, under a guardian.

This would be really hard to regulate for a government, I would think, especially via tax law.

- As for the Inheritance Issue you mentioned, Inherited wealth is also taxed under the condition that it amounts to over 3,000$ after one year of its distribution. So, inheritors are giving a chance to enjoy their new money, but once the year passes, it becomes taxed, unless it pertains to any of the above Assets (houses & such).

Right, but in America, estate taxes (essentially taxes on inheritance) are far higher than 2.5%.

- In Inheritance Law, there are 25 types of Inheritors. For example: 'the Son' is 1 type, including: the sons, the sons of the sons, & so on. Point being, any Wealth is guaranteed to be split into little pieces over every generation.

=> I don't see how there would be Inheritance Issues.

Look at the Waltons. The heirs of Sam Walton are individually some of the richest people in the world. 6 individuals have more wealth than the bottom 30% of Americans combined, and these 6 people had little to nothing to do with the creation of Walmart.
http://www.forbes.com...

What you're advocating does not guarantee that what I just cited will be prevented.

I mean, what's to stop someone from declaring some jewelry collection as being "for personal use" instead of for savings?

- You're right, nothing! You can call it a code of honour. However you should take into consideration three things:
> One: Jewellery is only allowed for Women. So, only Women can actually make such a declaration.
> Two: Extravagance is prohibited, & thus owning too much Jewellery warrants owning none at all, for one would lose his right to his wealth in that case, including the Jewellery.
> Three: there isn't enough Gold out there to accommodate the wealth of rich people, not by a veeeeery long shot. If you're really rich, at maximum you can manage to transform 1% of your wealth to Jewellery, so, what about the rest?!

There can easily be "enough gold out there"...you just raise the market price of gold to obscene levels and make one ounce of gold an astronomical price. I mean, gold in the 1930s was around $30/oz...it's worth over $1000/oz today.

It would also discourage productive activity, as it's the only activity being taxed.

- Not quite. Owning houses & cars & gardens & such IS a productive activity, for building, acquiring, maintaining . . . these things generates a great flow of economy & jobs, & forces the rich to pour their money elsewhere other than in their own pockets.

See consumption vs investment.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/28/2015 10:05:43 PM
Posted: 1 year ago
At 3/28/2015 8:09:45 AM, wrichcirw wrote:
- Don't you think that it Wealth has really less to do with Merit than with Circumstance. I mean a lot of people merit being rich, but aren't, as opposed to less capable ones.

The underlined doesn't make sense. I think wealth, and money in general, is what you want it to be. In some societies, a lot of wealth equates to a "rich" bloodline, in others, a lot of wealth indicates a self-made individual.

- Bottom line, all wealth is self-made, if it's not now, it was previously, one way or another. My point was, acquiring wealth depends heavily on the circumstances, if you take two individuals, one poor & one rich, & switch their circumstances, the poor might end up rich, & the rich might end up poor. For example, Steve Jobs happened to be best friend with Steve Wozniak, what if he didn't! Would he become the rich person he became? How about the other equally or more qualified people that weren't so lucky?

That's the thing...no one "should" be "given" a better life...they should have to earn it. That's the whole point behind a meritocratic system.

- I meant by "Given" as: 'have gone through a particular set of circumstances that allowed a particular course of acquiring wealth'.
- We have different understanding of what a Meritocratic System is. What is the scale on which Merit is measured?!!! In our case, it's all Circumstances. Very few people in History really merit what they got, the kind against whom the Circumstances were set. Michael Hart invokes this point on his book The 100, where he observed that some very influential historical characters lived in circumstances where their influence is maximised, & even if they didn't exist, some others will take their place all the same because the circumstances necessitate it, & if they were put in other circumstances, they wouldn't have made the impact they did ; while some others would've made the same impact regardless of the circumstances they were put in, & if they didn't exist, no one may take their place. He gave Simon Bolivar as example of the first type, & Muhammad as example of the second type.
- My understanding is, most people don't really merit being rich at the expense of others. The tables could've easily been turned around, & thus these people, being put in those better conditions, should give back a little for the less unfortunate ones.

Well, the money is circulating...it's sitting in banks and banks are using it as a reserve to lend out, or its sitting in stocks and corporate management is using that capital to whatever end. That's not the issue...the issue deals with the competence of the owner of that wealth, whether or not that owner is actually capable of allocating that capital in the "best" manner possible ("best" being either most profitable or most socially beneficial, take your pick). Just having competent managers is not enough if the owner is making terrible decisions...it's like handing someone a can of paint and asking them to paint a cruise ship.

- Money > More Money is not what I am talking about here!
- I haven't been clear enough, when I say "setting there", I mean that it isn't enjoyed neither by the owners, nor by those who really need it. It's useless money, for it is not doing its Job: which is being a Tool to acquiring Good Livelihood. You speak of Money as if it is the Goal, I speak of it as a simple Tool.

What you're saying is that consumption fuels economic activity, and yes, you're right...but it doesn't grow the economy. Investment, and only investment, does that. It's like the difference between putting gas in your car (consumption), and building a better engine for your car (investment). Both are necessary, but I hope you can see that investment is what is far more important in the long run.

- Sure.

Your interpretation of Islamic tax law discourages investment in favor of consumption.

- How so?
- The fact is, the opposite is true. If you have Profitable Assets, they'll be taxed by a rate of 2.5% per year, so, if you don't invest them, you'll eventual lose them. This forces shareholders, businessman, merchants. . . to commercialise & invest their Profitable Assets, so as to afford paying taxes. If you don't possess Profitable Assets, than your Savings (beyond your expenses) will be taxed, forcing you to invest your wealth too, & even if you don't, it'll serve a purpose regardless.
- No matter how I look at it, it's a win, win, win situation. Compared to the current Rate Taxes, 2.5% is derisory. In the US, Corporations hold the most Wealth & pay the least Taxes, while the heavy load is on ordinary employees & small businesses. Zakat does the opposite of that.

This would be really hard to regulate for a government, I would think, especially via tax law.

- Why do you think so?
- In Islamic Law, al-Hajr (legal restrain on handling wealth) is applicable to 6 types of people:
1. The Minor (Saghir): someone who hasn't reached puberty or adulthood (generally an orphan).
2. The Extravagant (Musrif): someone who spends in excess of what he should.
3. The Imbecile (Safih): foolish person incapable of handling his wealth.
4. The Insane (Majnun): mentally deranged, possessed, or strait crazy.
5. The Sick (Marid): someone ill & thus incapable of handling his wealth.
6. The Bankrupt (Muflis): someone whose debts outweigh his assets.
=> al-Hajr is a sub-branch of Islamic Law, & thus is very well established. & I think, there is an analogue Legal Procedure in Common Law as well, unless I am wrong.

Right, but in America, estate taxes (essentially taxes on inheritance) are far higher than 2.5%.

- Well, the problem with Inheritance isn't really Taxation, it's its own cumulation. Inherited Wealth should be broken into pieces over every generation to avoid this cumulation.
- As I said, the purpose of Zakat is not to impede people's spendings & wealth, it's to force them to circulate it, & give a little back.

Look at the Waltons. The heirs of Sam Walton are individually some of the richest people in the world. 6 individuals have more wealth than the bottom 30% of Americans combined, and these 6 people had little to nothing to do with the creation of Walmart.
http://www.forbes.com...

- The link is broken! But, 30%, WOW!!! Imagine if they paid 2.5% Tax Rate each year for that wealth!

What you're advocating does not guarantee that what I just cited will be prevented.

- How so?

There can easily be "enough gold out there"...you just raise the market price of gold to obscene levels and make one ounce of gold an astronomical price. I mean, gold in the 1930s was around $30/oz...it's worth over $1000/oz today.

- It's the value of the dollar that declined due to constant inflation, not the other way around.
- & in the real world, Gold is Gold, you can't raise its market price as you wish! It doesn't work like that.
- As to the value of Gold in Islamic Finance, well, there is a System for that too. The value of Gold is used interchangeably with other real values, for instance: 10 Dinars of Gold should equal more or less the following (on average):
> 120 Dirhams of Silver.
> 20 Sheep.
> 2 Cows.
> 2 Garments.
> 1 Camel.
. . .etc.
[ 1 Dinar of Gold is 4.25g, about $165 ]
=> In Islamic Law, Gold has a more or less fixed & real value, & thus can not be raised to any price!

- Free Market is an alien idea to Islamic Finance, because it's speculative & based on risks, which is against Shari'a Law. In other words, the Law has a say in what goes on the Market, & on the prices of currency & such.

- Plus, even if you have a lot of Jewellery, & you succeeded in convincing the Judge that you're not just being extravagant, you won't be able to sell it & thus not exploit it, for once you do, it'll be taxed.
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wrichcirw
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3/28/2015 10:53:23 PM
Posted: 1 year ago
At 3/28/2015 10:05:43 PM, Yassine wrote:
At 3/28/2015 8:09:45 AM, wrichcirw wrote:
- Don't you think that it Wealth has really less to do with Merit than with Circumstance. I mean a lot of people merit being rich, but aren't, as opposed to less capable ones.

The underlined doesn't make sense. I think wealth, and money in general, is what you want it to be. In some societies, a lot of wealth equates to a "rich" bloodline, in others, a lot of wealth indicates a self-made individual.

- Bottom line, all wealth is self-made, if it's not now, it was previously, one way or another.

This is simply not true. You are not your parents. You have different qualities from them.

That's the thing...no one "should" be "given" a better life...they should have to earn it. That's the whole point behind a meritocratic system.

- I meant by "Given" as: 'have gone through a particular set of circumstances that allowed a particular course of acquiring wealth'.
- We have different understanding of what a Meritocratic System is. [etc]
- My understanding is, most people don't really merit being rich at the expense of others. The tables could've easily been turned around, & thus these people, being put in those better conditions, should give back a little for the less unfortunate ones.

Your sentiments are almost picture-perfect Marxism. That's all I'll say to that. Marx did not believe in merit...he believed something along the lines of "From each according to his ability, to each according to his need," which is anything BUT a meritocracy. It is its polar opposite.

Well, the money is circulating...it's sitting in banks and banks are using it as a reserve to lend out, or its sitting in stocks and corporate management is using that capital to whatever end. That's not the issue...the issue deals with the competence of the owner of that wealth, whether or not that owner is actually capable of allocating that capital in the "best" manner possible ("best" being either most profitable or most socially beneficial, take your pick). Just having competent managers is not enough if the owner is making terrible decisions...it's like handing someone a can of paint and asking them to paint a cruise ship.

- Money > More Money is not what I am talking about here!
- I haven't been clear enough, when I say "setting there", I mean that it isn't enjoyed neither by the owners, nor by those who really need it. It's useless money, for it is not doing its Job: which is being a Tool to acquiring Good Livelihood. You speak of Money as if it is the Goal, I speak of it as a simple Tool.

It's not at all useless money...it's being invested or capitalized. The question is, is it being optimally invested or optimally capitalized, and given that the owners of that capital didn't have any experience earning it, the answer has to be no.

I don't think you understand basic aspects of how American capitalism works.

Your interpretation of Islamic tax law discourages investment in favor of consumption.

- How so?
- The fact is, the opposite is true. If you have Profitable Assets, they'll be taxed by a rate of 2.5% per year, so, if you don't invest them, you'll eventual lose them. This forces shareholders, businessman, merchants. . . to commercialise & invest their Profitable Assets, so as to afford paying taxes. If you don't possess Profitable Assets, than your Savings (beyond your expenses) will be taxed, forcing you to invest your wealth too, & even if you don't, it'll serve a purpose regardless.

Again, you do not understand the difference between consumptive economic activity and investment. Just because people are making things for others to buy, like toys and bubble baths, doesn't mean that that economic activity is actually productive economic activity. Consumption does not produce growth...only investment produces growth.

Look at the Waltons. The heirs of Sam Walton are individually some of the richest people in the world. 6 individuals have more wealth than the bottom 30% of Americans combined, and these 6 people had little to nothing to do with the creation of Walmart.
http://www.forbes.com...

- The link is broken! But, 30%, WOW!!! Imagine if they paid 2.5% Tax Rate each year for that wealth!

It works for me, oh well. Anyway, it's the same point, that 1% of America owns 40% of its assets, and much of the 1%'s wealth base came from inheritance and not through their own efforts.

What you're advocating does not guarantee that what I just cited will be prevented.

- How so?

If you split a pie in 6 parts, it doesn't mean that anyone who didn't own the pie beforehand is going to get any of that pie.

You're thinking along the lines of "well, the rich own maybe 10 times more than the poor, so you divide that by 5 and things look equal". Well, in America, the rich own maybe 1 million times more than the poor, so you divide by 5 and things still look unequal. This is why inheritance is considered a drag on the US economy.

Again, to reiterate, I think inequality is natural and shouldn't be discouraged...as long as issues surrounding inheritance do not get in the way.

There can easily be "enough gold out there"...you just raise the market price of gold to obscene levels and make one ounce of gold an astronomical price. I mean, gold in the 1930s was around $30/oz...it's worth over $1000/oz today.

- It's the value of the dollar that declined due to constant inflation, not the other way around.
- & in the real world, Gold is Gold, you can't raise its market price as you wish! It doesn't work like that.

It does work like that. Market price is a figment of our imagination...like I said, money is what you want it to be.

Jewelry does not have intrinsic value...you cannot eat it, you cannot live in it, you cannot ride it to work. Its value is a figment of your imagination.

=> In Islamic Law, Gold has a more or less fixed & real value, & thus can not be raised to any price!

This was true in the US as well...but again, I have to ask you how your system would account for markets in general.

- Free Market is an alien idea to Islamic Finance, because it's speculative & based on risks, which is against Shari'a Law. In other words, the Law has a say in what goes on the Market, & on the prices of currency & such.

Well, markets are how commerce works. I would be hesitant to think that Islamic traditions are an anathema to commerce...my understanding is that the Middle East has historically been THE HUB for Eurasian commerce, and that the best traders come from the Middle East, lol...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/28/2015 11:44:05 PM
Posted: 1 year ago
At 3/28/2015 10:53:23 PM, wrichcirw wrote:
This is simply not true. You are not your parents. You have different qualities from them.

- Well, either they or their parents or grand-parents did.
- You're thinking about this in the short term. What I am arguing is what if Zakat was implemented, which assumes that it was always there.

Your sentiments are almost picture-perfect Marxism. That's all I'll say to that. Marx did not believe in merit...he believed something along the lines of "From each according to his ability, to each according to his need," which is anything BUT a meritocracy. It is its polar opposite.

- Of course not. I am not saying "each according to his ability"!! I am saying chance has a lot to do with it, & thus sharing a little is not so bad. Sure, get rich, but give a little back, it's not like you really deserved it.

It's not at all useless money...it's being invested or capitalized. The question is, is it being optimally invested or optimally capitalized, and given that the owners of that capital didn't have any experience earning it, the answer has to be no.

- Again, you're thinking of Money as the Goal. That's not what I am talking about, unless you mean something else.

I don't think you understand basic aspects of how American capitalism works.

- I think I do, you're probably misunderstanding what I am arguing.

Again, you do not understand the difference between consumptive economic activity and investment. Just because people are making things for others to buy, like toys and bubble baths, doesn't mean that that economic activity is actually productive economic activity. Consumption does not produce growth...only investment produces growth.

- I WAS talking about Investments. If you have Funds, Assets, Merchandise. . . you should invest them to afford paying the Taxes, & even if you don't, the amount will be deducted regardless.

It works for me, oh well. Anyway, it's the same point, that 1% of America owns 40% of its assets, and much of the 1%'s wealth base came from inheritance and not through their own efforts.

If you split a pie in 6 parts, it doesn't mean that anyone who didn't own the pie beforehand is going to get any of that pie.

- In Islamic Inheritance Law, It does often mean that. Inheritance Law is a Set System, in other words it's part of what's called in Shari'a Hukm Waqfi (Blocked Medium). Meaning, the Rules of Inheritance Law don't change, as in no one has the authority to change them. If the Son, in a particular distribution, gets 1/6 or 1/8 of the Wealth, that's what he'll get, in this particular distribution, always, no matter what. The Quotas are already decided.
=> Point: there are 25 types of people that have access to the Inheritance, & it's highly unlikely that all these 25 types already own part of Wealth.

- You should look at this in the long run, if such a System was installed, Wealth will never cumulate to such obscene amounts in the first place, & even if it does, it'll be taxed yearly (by a 2.5% rate) anyways.

You're thinking along the lines of "well, the rich own maybe 10 times more than the poor, so you divide that by 5 and things look equal". Well, in America, the rich own maybe 1 million times more than the poor, so you divide by 5 and things still look unequal. This is why inheritance is considered a drag on the US economy.

- The point is not Equality, that's absurd! The point is Moderation, i.e. Profit & Share, get rich & give a little back. If the rich owns 1 million times that the poor, then the poor shall be exempt, & shall also benefit from the 25,000-times of the 1 million each year.

Again, to reiterate, I think inequality is natural and shouldn't be discouraged...as long as issues surrounding inheritance do not get in the way.

- That's all I am trying to say, although, Moderation should be encouraged, not too much Disparity & not too little.

It does work like that. Market price is a figment of our imagination...like I said, money is what you want it to be.

- ? ? ?

Jewelry does not have intrinsic value...you cannot eat it, you cannot live in it, you cannot ride it to work. Its value is a figment of your imagination.

- We're talking about Gold here, specifically.

This was true in the US as well...but again, I have to ask you how your system would account for markets in general.

- I didn't quite get the question, could you elaborate?

Well, markets are how commerce works.

- Of course.
- The Issue is not Markets, it's Free Markets, in the sense that, let the Market decide without restrictions.
- Let me give you examples of types of transactions that occur on the Free Market, but are unlawful in Islamic Law:
> Selling something that one does not possess.
> Buying & selling goods, before actually acquiring the goods.
> al-Gharar: trading in uncertainty or hidden value, such as buying selling harvest before the harvest, or selling fish in the sea. . .
> Selling in the future.
> Monopoly on the market.
. . .etc.
=> In general, in Islamic Finance: Time, Risk, & Uncertainty, can NOT be compensated by Money, & are thus valueless. So, Gambling for example is unlawful.

I would be hesitant to think that Islamic traditions are an anathema to commerce.

- True, Islamic Financial Law, & Islamic Finance is very Commerce oriented.

my understanding is that the Middle East has historically been THE HUB for Eurasian commerce, and that the best traders come from the Middle East, lol...

- Also true.
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wrichcirw
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3/28/2015 11:53:45 PM
Posted: 1 year ago
At 3/28/2015 11:44:05 PM, Yassine wrote:
At 3/28/2015 10:53:23 PM, wrichcirw wrote:
This is simply not true. You are not your parents. You have different qualities from them.

- Well, either they or their parents or grand-parents did.
- You're thinking about this in the short term. What I am arguing is what if Zakat was implemented, which assumes that it was always there.

No, you're conflating "self" with "bloodline". You are not your bloodline. This has nothing to do with "short term vs long term" or whatever you are trying to argue.

Your sentiments are almost picture-perfect Marxism. That's all I'll say to that. Marx did not believe in merit...he believed something along the lines of "From each according to his ability, to each according to his need," which is anything BUT a meritocracy. It is its polar opposite.

- Of course not. I am not saying "each according to his ability"!! I am saying chance has a lot to do with it, & thus sharing a little is not so bad. Sure, get rich, but give a little back, it's not like you really deserved it.

Then you don't believe in meritocracy at all. You shouldn't be using that word to describe your advocacy, in which case I completely rescind any support I had for it, lol.

It's not at all useless money...it's being invested or capitalized. The question is, is it being optimally invested or optimally capitalized, and given that the owners of that capital didn't have any experience earning it, the answer has to be no.

- Again, you're thinking of Money as the Goal. That's not what I am talking about, unless you mean something else.

You've mischaracterized my arguments here again. I have no idea what you are talking about anymore.

I don't think you understand basic aspects of how American capitalism works.

- I think I do, you're probably misunderstanding what I am arguing.

You've yet to demonstrate any basic understanding.

Again, you do not understand the difference between consumptive economic activity and investment. Just because people are making things for others to buy, like toys and bubble baths, doesn't mean that that economic activity is actually productive economic activity. Consumption does not produce growth...only investment produces growth.

- I WAS talking about Investments. If you have Funds, Assets, Merchandise. . . you should invest them to afford paying the Taxes, & even if you don't, the amount will be deducted regardless.

You said, exactly:

Now, in the US, if the rich really spent their money on houses & cars & gardens more freely, they'll get the economy growing...

This is NOT investment spending. There is NO GROWTH HERE.

It does work like that. Market price is a figment of our imagination...like I said, money is what you want it to be.

- ? ? ?

Right here you again demonstrate a complete lack of even basic knowledge of American capitalism.

Jewelry does not have intrinsic value...you cannot eat it, you cannot live in it, you cannot ride it to work. Its value is a figment of your imagination.

- We're talking about Gold here, specifically.

The same is true for gold. The same is true for any money system.

This was true in the US as well...but again, I have to ask you how your system would account for markets in general.

- I didn't quite get the question, could you elaborate?

Well, markets are how commerce works.

- Of course.
- The Issue is not Markets, it's Free Markets, in the sense that, let the Market decide without restrictions.
- Let me give you examples of types of transactions that occur on the Free Market, but are unlawful in Islamic Law:
> Selling something that one does not possess.
> Buying & selling goods, before actually acquiring the goods.
> al-Gharar: trading in uncertainty or hidden value, such as buying selling harvest before the harvest, or selling fish in the sea. . .
> Selling in the future.
> Monopoly on the market.
. . .etc.
=> In general, in Islamic Finance: Time, Risk, & Uncertainty, can NOT be compensated by Money, & are thus valueless. So, Gambling for example is unlawful.

This type of advocacy risks destroying most debt-funded enterprises, even if they're only partially funded by debt.

I would be hesitant to think that Islamic traditions are an anathema to commerce.

- True, Islamic Financial Law, & Islamic Finance is very Commerce oriented.

my understanding is that the Middle East has historically been THE HUB for Eurasian commerce, and that the best traders come from the Middle East, lol...

- Also true.

I would simply council here against false pride. Your advocacy does not merit such a reputation, IMHO.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/29/2015 12:11:31 AM
Posted: 1 year ago
At 3/28/2015 11:53:45 PM, wrichcirw wrote:
No, you're conflating "self" with "bloodline". You are not your bloodline. This has nothing to do with "short term vs long term" or whatever you are trying to argue.

- We are diverging here. How about you put forward your argument, so I can understand what exactly you're trying to say here.

Then you don't believe in meritocracy at all. You shouldn't be using that word to describe your advocacy, in which case I completely rescind any support I had for it, lol.

- Still didn't get what you're saying =/

You've mischaracterized my arguments here again. I have no idea what you are talking about anymore.

- So, what's your argument then?

You've yet to demonstrate any basic understanding.

- Come on!

You said, exactly:

Now, in the US, if the rich really spent their money on houses & cars & gardens more freely, they'll get the economy growing...

This is NOT investment spending. There is NO GROWTH HERE.

- That was clearly about personal expenses, which do not include Personal Savings nor Profitable Assets, which are the source of Investment.

It does work like that. Market price is a figment of our imagination...like I said, money is what you want it to be.

- ? ? ?

Right here you again demonstrate a complete lack of even basic knowledge of American capitalism.

- Nope, it was you who has some weird ideas about Currency & Market Value. Sure, there is an 'invisible hand' behind, but it's not arbitrary, there is an actually MATH governing the System!!

The same is true for gold. The same is true for any money system.

- Of course it's not! COME ON!

This type of advocacy risks destroying most debt-funded enterprises, even if they're only . . ;

- Not entirely true. However, if the current state of affairs, you'd be likely right. It's all capitalized value, as opposed to real value.
- Plus, debt-funded businesses & Banks as known today could not exist under Islamic Law in the first place.

I would simply council here against false pride. Your advocacy does not merit such a reputation, IMHO.

- I don't quite get what you're trying to say here.
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3/29/2015 3:14:01 AM
Posted: 1 year ago
At 3/29/2015 12:11:31 AM, Yassine wrote:
At 3/28/2015 11:53:45 PM, wrichcirw wrote:

It does work like that. Market price is a figment of our imagination...like I said, money is what you want it to be.

- ? ? ?

Right here you again demonstrate a complete lack of even basic knowledge of American capitalism.

- Nope, it was you who has some weird ideas about Currency & Market Value. Sure, there is an 'invisible hand' behind, but it's not arbitrary, there is an actually MATH governing the System!!

The same is true for gold. The same is true for any money system.

- Of course it's not! COME ON!

You really don't get how markets work. In markets, perception is reality. Any "math" that goes on in determining market value is math being applied to a model used to aid perception, the goal being to perceive what your counter party perceives so that you can take advantage of that knowledge. In the end, it's the perception that counts.

If people perceive that markets for capital goods have entered a "new era" of infinite earnings potential, then the price for capital goods will go through the roof. If people perceive that markets for capital goods have entered a terminal decline and that the world is going to end, then the price for those goods will be low indeed.

As far as the rest of your response is concerned, you're simply not using proper terminology, nor do you seem to be aware what that terminology is, so it's impossible to determine exactly what you are trying to say. You're trying to use words the definition and application of which you're absolutely clueless about, which renders a conversation with you about this topic to be pointless. You can't even apply a simple word like "merit" properly.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Yassine
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3/29/2015 3:32:06 AM
Posted: 1 year ago
At 3/29/2015 3:14:01 AM, wrichcirw wrote:
You really don't get how markets work. In markets, perception is reality. Any "math" that goes on in determining market value is math being applied to a model used to aid perception, the goal being to perceive what your counter party perceives so that you can take advantage of that knowledge. In the end, it's the perception that counts.

- &? What is arbitrary about that?

If people perceive that markets for capital goods have entered a "new era" of infinite earnings potential, then the price for capital goods will go through the roof. If people perceive that markets for capital goods have entered a terminal decline and that the world is going to end, then the price for those goods will be low indeed.

- It's all about Trust, Gold is Gold because its value is trustworthy, the same goes for currency (particularly the dollar) & market values, or else we'll be having crazy shifts & hyperinflation/deflation allover.

As far as the rest of your response is concerned, you're simply not using proper terminology, nor do you seem to be aware what that terminology is, so it's impossible to determine exactly what you are trying to say. You're trying to use words the definition and application of which you're absolutely clueless about, which renders a conversation with you about this topic to be pointless.

- My terminology is fine, & you seem to have some weird notions about how Finance works!
- Regardless, that's all beside the point. Why are we even talking about this in the first place?! Off Topic!

You can't even apply a simple word like "merit" properly.

- I disagree, & you're welcome to elaborate your own understanding of Merit, you can't take Chance & forcefully call it Merit without accounting for the Circumstances!
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Yassine
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3/29/2015 3:33:37 AM
Posted: 1 year ago
At 3/17/2015 8:11:24 PM, ResponsiblyIrresponsible wrote:
This is really cool...I'm going to have to sit down and sort through this at some point, lol.

- Dude we are waiting for you here ;)
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ResponsiblyIrresponsible
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3/29/2015 8:12:29 AM
Posted: 1 year ago
At 3/29/2015 3:33:37 AM, Yassine wrote:
At 3/17/2015 8:11:24 PM, ResponsiblyIrresponsible wrote:
This is really cool...I'm going to have to sit down and sort through this at some point, lol.

- Dude we are waiting for you here ;)

Lol, sorry, super busy!
~ResponsiblyIrresponsible

DDO's Economics Messiah
wrichcirw
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3/29/2015 8:27:09 AM
Posted: 1 year ago
At 3/29/2015 3:32:06 AM, Yassine wrote:
At 3/29/2015 3:14:01 AM, wrichcirw wrote:
You really don't get how markets work. In markets, perception is reality. Any "math" that goes on in determining market value is math being applied to a model used to aid perception, the goal being to perceive what your counter party perceives so that you can take advantage of that knowledge. In the end, it's the perception that counts.

- &? What is arbitrary about that?

Again, you really, REALLY don't get how markets work. Please figure out the difference between the "market value" and "book value" of an asset, and figure out under what circumstances either would shift. You will find one to be arbitrary compared to the other.

If people perceive that markets for capital goods have entered a "new era" of infinite earnings potential, then the price for capital goods will go through the roof. If people perceive that markets for capital goods have entered a terminal decline and that the world is going to end, then the price for those goods will be low indeed.

- It's all about Trust, Gold is Gold because its value is trustworthy, the same goes for currency (particularly the dollar) & market values, or else we'll be having crazy shifts & hyperinflation/deflation allover.

Trust is a relative, subjective, quantifiable, and ultimately arbitrary variable. You're right that without trust in money, there is uncontrollable deflation/inflation. Regardless, that trust is ALL PERCEPTION.

As far as the rest of your response is concerned, you're simply not using proper terminology, nor do you seem to be aware what that terminology is, so it's impossible to determine exactly what you are trying to say. You're trying to use words the definition and application of which you're absolutely clueless about, which renders a conversation with you about this topic to be pointless.

- My terminology is fine, & you seem to have some weird notions about how Finance works!
- Regardless, that's all beside the point. Why are we even talking about this in the first place?! Off Topic!

That IS the whole point. Taxation is a function of the economic activity of a polity, meaning that analyzing how the finances of that polity are handled is central to any tax policy. It's rather clear you don't have a basic conception of western economics, which means you're incapable of discussing a comparative between whatever it is you are proposing and what already exists here.

You can't even apply a simple word like "merit" properly.

- I disagree, & you're welcome to elaborate your own understanding of Merit, you can't take Chance & forcefully call it Merit without accounting for the Circumstances!

I've explained it multiple times in this thread already.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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3/29/2015 8:28:19 AM
Posted: 1 year ago
At 3/29/2015 8:12:29 AM, ResponsiblyIrresponsible wrote:
At 3/29/2015 3:33:37 AM, Yassine wrote:
At 3/17/2015 8:11:24 PM, ResponsiblyIrresponsible wrote:
This is really cool...I'm going to have to sit down and sort through this at some point, lol.

- Dude we are waiting for you here ;)

Lol, sorry, super busy!

I thought so too but the resulting conversation was a bit of a let down.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
ResponsiblyIrresponsible
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3/29/2015 8:28:59 AM
Posted: 1 year ago
At 3/29/2015 8:28:19 AM, wrichcirw wrote:
At 3/29/2015 8:12:29 AM, ResponsiblyIrresponsible wrote:
At 3/29/2015 3:33:37 AM, Yassine wrote:
At 3/17/2015 8:11:24 PM, ResponsiblyIrresponsible wrote:
This is really cool...I'm going to have to sit down and sort through this at some point, lol.

- Dude we are waiting for you here ;)

Lol, sorry, super busy!

I thought so too but the resulting conversation was a bit of a let down.

I'll have to read it over then....perhaps I'll be able to respond by later today.
~ResponsiblyIrresponsible

DDO's Economics Messiah
wrichcirw
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3/29/2015 8:33:53 AM
Posted: 1 year ago
At 3/29/2015 8:27:09 AM, wrichcirw wrote:
At 3/29/2015 3:32:06 AM, Yassine wrote:
At 3/29/2015 3:14:01 AM, wrichcirw wrote:
You really don't get how markets work. In markets, perception is reality. Any "math" that goes on in determining market value is math being applied to a model used to aid perception, the goal being to perceive what your counter party perceives so that you can take advantage of that knowledge. In the end, it's the perception that counts.

- &? What is arbitrary about that?

Again, you really, REALLY don't get how markets work. Please figure out the difference between the "market value" and "book value" of an asset, and figure out under what circumstances either would shift. You will find one to be arbitrary compared to the other.

I know you're trying to have a constructive discussion on this topic, and to that end, here's something that will (hopefully) help you understand this concept:

http://en.wikipedia.org...

Note how market prices fluctuate. That fluctuation is arbitrary...it is nothing but changes in perception in market participants.

Ben Graham wrote the book on modern security analysis, indeed his "bible" is called "Security Analysis". He mentored Warren Buffett, and Buffett considers him to be akin to a second father.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
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3/29/2015 8:35:55 AM
Posted: 1 year ago
Finally, also note that Ben Graham was Jewish. If that's going to cause you some discomfort, best we end this conversation here. I don't have any interest in turning this conversation into a discussion about the merits/demerits of anti-Semitism.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?