Is Zakaah sufficient to restore economic balance in the society?
No doubt, if the super-rich were obliged to pay 2.5% on their wealth, with distribution among the poor, it would make a tremendous impact. However, the current system of wealth management makes this obligation complicated according to the rules of Zakaah.
For example, when wealth is held in the form of corporate shares, a number of problems arise.
The accepted formula for payment of Zakaah on the shares someone owns for the purpose of earning dividends (which is the type of share ownership usually employed by the super-rich), is that a company’s liabilities are subtracted from its assets and then this amount is divided by the number of outstanding shares; Zakaah is then due on this amount, multiplied by the number of shares a person owns.
So, for example, someone may own $50,000 worth of shares in a company, but they do not actually pay 2.5% of that $50,000. Because they only pay on the assets minus the liabilities divided by the outstanding shares, they may end up paying Zakaah on only 0.5% of the market value of the shares or even less; so instead of paying, say, $1,250 in Zakaah for their shares, they only pay $6.25.
Clearly, other regulatory measures are necessary to respond to the disparity and imbalance caused by the modern economic system.
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