Abstract
Scholars have not written too much about the ethics of tax evasion specifically,1 although a few scholars have mentioned it in a book about something else, like business ethics. According to Islam, Muslims have a moral obligation to pay zakat for the support of the poor and for the legitimate functions of government. Thus, evading one’s duty to pay zakat is classified as an immoral act. The Islamic system of taxation is a voluntary one, at least partially, although Islamic literature makes it clear that a government is justified in forcing people to pay taxes if the amount raised by zakat is insufficient to cover all the legitimate costs of government. However, “This right of interference with the individual’s personal property will be limited to the extent required by the general welfare of the society …”2
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NOTES
Two scholars who have written specifically about the ethics of tax evasion in Islam are Athar Murtuza and S.M. Ghazanfar. 1998. Tax as a Form of Worship: Exploring the Nature of Zakat. Journal of Accounting, Ethics & Public Policy 1(2); 134–161.
Mushtaq Ahmad. 1995. Business Ethics in Islam. Islamabad, Pakistan: The International Institute of Islamic Thought and the International Institute of Islamic Economics, p. 134.
S.M. Yusuf. 1971. Economic Justice in Islam. Lahore: Sh. Muhammad Ashraf, p. 96.
For more on the legitimate role of the government under Islam, see M. Nejatullah Siddiqi. 1996. Role of the State in the Economy: An Islamic Perspective. Leicester, UK.: The Islamic Foundation.
pp. 135-136.
Yusuf, 96.
Yusuf, 68, 101.
Yusuf, 9-10.
Yusuf, 67.
Yusuf, 67. Since there must not be any income tax, there definitely must not be any graduated income tax, which necessarily treats the rich less favorably than the poor. According to Yusuf (p. 67): “There is no tax on income, which curbs initiative and enterprise. The progressive taxation assumes illegitimacy of the income of the rich. The rising slabs represent taxation with vendetta. Only a proportional tax at a fixed rate (on the pattern of Zakat) is to be levied on the accumulated wealth of the capable taxpayers without any distinction.” S.M. Yusuf. 1971. Economic Justice in Islam. Lahore: Sh. Muhammad Ashraf.
Yusuf, 67.
Yusuf, 67.
A simplified definition of a direct tax is a tax that individuals or corporations pay directly. Joseph E. Stiglitz. 1988. Economics of the Public Sector, second edition. New York: W.W. Norton & Company, p. 387. Indirect taxes are taxes on commodities. However, the burden of a corporate income tax is ultimately borne by individuals, either shareholders, consumers or the corporation’s employees. So a case can be made that a corporate income tax is actually an indirect tax. For more on the distinction between direct and indirect taxes, as well as the ethics of tax evasion in general, see Robert W. McGee. 1994. Is Tax Evasion Unethical? The University of Kansas Law Review 42:2 (Winter): 411-435.
Ahmad, 122.
Ahmad, 123.
Ahmad, 123.
For examples, see Ronald Utt.. 1991. The Growing Regulatory Burden: At What Cost To America? IPI Policy Report No. 114, Lewisville, TX: Institute for Policy Innovation. November; James L. Payne. 1992. Unhappy Returns: The $600-Billion Tax Ripoff. Policy Review (Winter): 18–24; Murray L. Weidenbaum and Robert DeFina. 1978. The Cost of Federal Regulation of Economic Activity. Washington, DC: American Enterprise Institute. May; Lawrence J. MacDonnell. 1989. Government Mandated Costs: The regulatory burden of environmental, health and safety standards. Resources Policy 15(1): 75-100. March 1; U.S. General Accounting Office. 1993. Regulatory Burden: Recent Studies, Industry Issues, and Agency Initiatives. GAO/GGD-94-28. December; Wayne B. Gray. 1987. The Cost of Regulation: OSHA, EPA and the Productivity Slowdown. American Economic Review 77: 998–1006; Thomas D.Hopkins. 1991. Cost of Regulation. An RIT Public Policy Working Paper, Rochester Institute of Technology; Jonathan H. Adier.1996. Property Rights, Regulatory Takings, and Environmental Protection. Washington, DC: Competitive Enterprise Institute; Bruce Yandle. 1994. Regulatory Takings, Farmers, Ranchers and the Fifth Amendment. Center for Policy Studies, Clemson University.
For example, see United States Trade Representative, 2003 National Trade Estimate Report on FOREIGN TRADE BARRIERS (Washington, DC: Superintendent of Documents).
For a study that discusses some regulations that actually make things worse rather than better see Richard L. Stroup and John C. Goodman. 1989. Making the World Less Safe: The Unhealthy Trend in Health, Safety, and Environmental Regulation. NCPA Policy Report #137, Dallas: National Center for Policy Analysis.
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McGee, R.W. (2004). Tax Evasion in Islam. In: The Philosophy of Taxation and Public Finance. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-9140-9_7
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