Standing Wealth, Not Income

As to the percentage: there are three types of zakāt. Income tax is prohibited in Islam. One cannot tax people for the income that they are using to live by. One can only tax them according to standing wealth that has accumulated over a year. So if a year has passed and a person still has the wealth, that is what he pays zakāt on; he does not pay zakāt based on what he made that year. So if a person made fifty thousand dollars, but at the end of the year has zero — which is the case for a lot of people in this country, who actually have to borrow to pay the IRS — he does not pay any zakāt. One pays zakāt at the end of a lunar year, on what one has that a year has transpired with, and one pays one-fortieth: two and a half per cent of the entire thing. So if a person had forty dollars, he would pay one dollar, after the whole year. It is not a big, big amount.

A good question arises here: where do want and need come into this? In other words, if a wealthy person buys a car for a hundred thousand dollars, and a poor person buys one for five hundred dollars, can the wealthy person just spend his money on that? Yes. Wealthy people's money is discretionary. It is highly discouraged to waste, and it is actually prohibited to be grossly extravagant; but the Prophet Muhammad (peace be upon him) said: Allah loves to see the traces of His blessings on His creatures. And so it is encouraged for a wealthy person to dress — not extravagantly — but to wear things in order to show the blessing on him.

There is a beautiful book called Envy: Towards a Social Theory^**, a fascinating book about the disruptive aspects of envy in a culture. One of the worst things in Islam is envy; it is literally considered one of the worst things. It is one of the seven deadly sins in the Christian, Catholic tradition — there is the story of a Catholic father who said that he was unfortunately familiar with about four of them, and his friend told him that one is enough to kill you. But envy is one of the seven deadly sins in the Western tradition, and in the Islamic tradition it is also one of the really bad things. And so the idea is that poor people should not envy rich people; it is really considered a bad thing to envy rich people. Poor people should thank God. In fact the Prophet Muhammad (peace be upon him) said: in terms of your worldly condition, always look to people below you; and in terms of your other-worldly condition, always look at people better than you. So in terms of righteousness and piety, look at people who are superior to you, so that you might never become deluded about yourself and so that you always want to improve; but in terms of the material world, look at people worse off than you, so that you feel grateful for what you have.

The book, again, is called Envy: Towards a Social Theory, and it is by a German author, though the author's name is not easily recalled — the book having been acquired only a couple of months before, the name was not to hand. On the question of what zakāt resembles: it is more like a capital gains tax — capital at the end of the year.