Taxation
Income tax mounts at a steep rate[edit]
"The income tax, according to the Bahá'í teachings, mounts at quite a steep rate so that great sums of money would be very heavily taxed. But the individual is free to make his will as he pleases. What he has laboured for he has the right to dispose of. The greater the sum inherited, the higher the tax will be."
- (On behalf of Shoghi Effendi, 11 February 1944; at Economics compilation, no. 31)
A revenue of the village storehouse[edit]
"The first revenue is the tithe. It should be collected as follows: If, for instance, the income of a person is five hundred dollars and his necessary expenses are the same, no tithes will be collected from him. If another's expenses are five hundred dollars while his income is one thousand dollars, one tenth will be taken from him, for he hath more than his needs; if he giveth one tenth of the surplus, his livelihood will not be adversely affected. If another's expenses are one thousand dollars, and his income is five thousand dollars, as he hath four thousand dollars surplus he will be required to give one and a half tenths. If another person hath necessary expenses of one thousand dollars, but his income is ten thousand dollars, from him two tenths will be required for his surplus represents a large sum. But if the necessary expenses of another person are four or five thousand dollars, and his income one hundred thousand, one fourth will be required from him. On the other hand, should a person's income be two hundred, but his needs absolutely essential for his livelihood be five hundred dollars, and provided he hath not been remiss in his work or his farm hath not been blessed with a harvest, such a one must receive help from the general storehouse so that he may not remain in need and may live in comfort."
- ('Abdu'l-Bahá, quoted in Economics compilation, sel. 9 (or see Redistribution of Wealth compilation no. 9; see also FWU-Cooperation))
Call for progressive taxation[edit]
"As to the economic question, it hath been stated briefly and the basis of it hath been set forth, while its details are to be fixed by the Universal House of Justice. The board of the house of finance (storehouse) will direct in every village the revenues of the house, such as tithes, tax on animals, etc. In every village a storehouse and an officer in charge are to be provided, while the notables of the village gather and form a board and to this board and officer the direction of the affairs of the village are entrusted. They take charge of all questions pertaining to the village, and the revenues of the storehouse such as tithes, tax on animals and other revenues are gathered in it and are given out for necessary expenditures.
"As to the doubling of tithes in accordance with the size of revenues and of crops: it is not possible to double as a fixed proportion the amount of tithes to be paid when the revenues are doubled. For instance, a man whose revenues amount to l,000 dollars and whose expenses are 500 dollars, should pay one tenth of his revenues, i.e. 100 dollars. When his revenues reach 2,000 dollars and his expenses remain 500 dollars, he cannot pay two tenths of his revenues, i.e. 400 dollars, for it would be difficult. At most he can pay 1.5 tenths, which is 300 dollars. If his revenues rise to 4,000 dollars, he can give 1.75 tenths of his revenues, i.e. 700 dollars, and if his revenues are 8,000 dollars, he can pay two tenths, i.e. 1,600 dollars, and if they still rise to 16,000 dollars, he can pay one fourth (2.5 tenths), i.e. 4,000 dollars. If they still rise to 32,000 dollars and the tithes to be taken from him were to be fixed at a definite ratio (i.e. doubled every time), they would constitute a huge amount which he would not be able to pay, as the preparation of the harvest entails many expenditures. Therefore, for a revenue of 16,000 dollars, one fourth is taken from him (2.5 tenths). In short the division and the fixing of everyone's share are to be arranged in accordance with the time and place by the House of Justice.
"What hath been stated is only an example and this doth not mean that it should be enforced exactly in this manner. The principle is that as a man's wealth increaseth, his financial obligations should proportionately increase, so that vast riches may not be accumulated in one place. In this manner justice may be exercised between the rich and the poor. Thus there will not be, on one hand, a man owning a thousand million and, on the other, a poor man in need of his necessary subsistence. As to the revenues of the storehouse, the House of Justice must strive by every means possible to increase that amount, i.e. by every just means. Likewise with the expenditures; if anything is deemed necessary for the village such as the providing of hygienic measures, the House of Justice must also make all the necessary provisions. In short, if it is done in this manner in the village, the orphans, the disabled and the poor will secure the means of subsistence; education will be fostered, and the adoption of hygienic measures will become universal.
"These are only the preliminary principles; the House of Justice will arrange and widen them in accordance with time and place."
- ('Abdu'l-Bahá, from a Tablet dated 25 July 1919 to an individual believer -- provisional translation from the Persian, quoted in Economics compilation, sel. 10)
"Difference of capacity in human individuals is fundamental. It is impossible for all to be alike, all to be equal, all to be wise. Bahá'u'lláh has revealed principles and laws which will accomplish the adjustment of varying human capacities. He has said that whatsoever is possible of accomplishment in human government will be effected through these principles. When the laws He has instituted are carried out, there will be no millionaires possible in the community and likewise no extremely poor. This will be effected and regulated by adjusting the different degrees of human capacity. The fundamental basis of the community is agriculture, tillage of the soil. All must be producers. Each person in the community whose need is equal to his individual producing capacity shall be exempt from taxation. But if his income is greater than his needs, he must pay a tax until an adjustment is effected. That is to say, a man's capacity for production and his needs will be equalized and reconciled through taxation. If his production exceeds, he will pay a tax; if his necessities exceed his production, he shall receive an amount sufficient to equalize or adjust. Therefore, taxation will be proportionate to capacity and production, and there will be no poor in the community."
"Regarding the question of economics according to the new teachings, as this caused some difficulty for you because the report you received did not reflect what I said, I shall outline the essence of this matter so that it will be clearly proven that there is no complete solution for the economic question apart from that offered in the new teachings. It is absolutely impossible to resolve the problem by other means.
"In solving this problem we must start with the farmer and end with other trades, because there are twice as many farmers, if not more, as there are people engaged in other trades. Thus it is right that we begin with them. The farmer is the primary factor in society.
"In every village a council of wise men of the village should be established and the whole village should be placed under its jurisdiction. In addition, a public treasury should be established with its own administrator. At harvest time a specific quantity of the general produce of the village should be appropriated for the treasury. This treasury will have seven sources of income, namely: tithes, taxes on livestock, unclaimed inheritance, property that has been found but that has no owner, buried treasure (if found, one third of it should be paid to the council), mines (one-third of the natural resources taken should be levied by the council) and donations. Likewise, there are to be seven categories of expenditure: first, moderate public expenditures such as the expenses of the council and maintenance of public health; second, payment of government taxes; third, payment of taxes on livestock to the government; fourth, care of orphans; fifth, providing for the disabled; sixth, management of schools; and seventh, providing the necessary means of livelihood for the poor.
"The first means of income is the tithe, which must be administered as follows: If a person's average income is $500 and his necessary expenses amount to the same sum, no tithe will be collected from him. If another person has an income of $1,000 and his necessary expenses amount to $500, he will be able to pay the tithe because he will have more than he needs. If he pays the tithe there will be no decline in his standard of living. Another has an income of $5,000 and his expenses are only $1,000, so he will have to pay one and one-half times the tithe because he has an even greater amount than he needs. Another has an income of $10,000 and his necessary expenses amount to $1,000; therefore he will have to pay two times the tithe because his surplus is larger. Another person has an income of $100,000 and expenses amounting to $4,000 or $5,000; he will have to pay one-fourth of his income. Another has an income of $200 but the expenses he requires to live at subsistence level amount to $500. He spares no pains in working and laboring for his livelihood but the fruit of his labor is inadequate. He must be helped from the treasury so that he may not be in want and may live in comfort.
"In every village a certain amount should be allocated for the orphans there. The disabled must be provided for. The treasury must also provide for the needy who are unable to work. The council will also allocate a certain amount for the department of education and for public health. If there is a surplus, it will be transferred to the national treasury for general expenses. If it be thus arranged, every individual in society will live comfortably and pass his days happily.
"Differences in station will also remain and no breach will occur in this respect. Gradations of rank are without doubt one of the essentials of society. Society is like an army. An army requires field marshals, generals, colonels, captains and privates. It is utterly impossible for all professions to be equal. Preservation of rank is necessary. But each individual in the army must live in perfect peace and comfort. Likewise, a town requires a mayor, judges, merchants, men of means, craftsmen and farmers. Of course, these ranks must be observed, otherwise the general order would be disrupted.
"Convey my heartfelt love to Mr Parsons. I shall never forget him. If possible, have this letter published in one of the newspapers, as others are proclaiming these principles in their own names. Convey wondrous Abhá greetings to Qudsíyyih."
- ('Abdu'l-Bahá, Mahmúd's Diary, August 14, 1912)
(System for adjusting tithes/taxes based on income and expenses and use for the needy)[edit]
"As to the first, the tenths or tithes: We will consider a farmer, one of the peasants. We will look into his income. We will find out for instance, what is his annual revenue and also what are his expenditures. Now, if his income be equal to his expenditures, from such a farmer nothing whatever will be taken. That is, he will not be subjected to taxation of any sort, needing as he does all his income. Another farmer may have expenses running up to one thousand dollars, we will say, and his income is two thousand dollars. From such an one a tenth will be required, because he has a surplus. But if his income be ten thousand dollars and his expenses one thousand dollars or his income twenty thousand dollars, he will have to pay as taxes, one fourth. If his income be one hundred thousand dollars, and his expenses five thousand, one third will he have to pay because he has still a surplus since his expenses are five thousand and his income one hundred thousand. If he pays, say, thirty-five thousand dollars, in addition to the expenditure of five thousand he still has sixty thousand left. But if his expenses be ten thousand and his income two hundred thousand, then he must give an even half because ninety thousand will be in that case the sum remaining. Such a scale as this will determine allotment of taxes. All the income from such revenues will go to this general storehouse.
"Then there must be considered such emergencies as follows: A certain farmer whose expenses run up to ten thousand dollars and whose income is only five thousand will receive necessary expenses from the storehouse. Five thousand dollars will be allotted to him so he will not be in need.
"Then the orphans will be looked after, all of whose expenses will be taken care of. The cripples in the village—all their expenses will be looked after. The poor in the village—their necessary expenses will be defrayed. And other members who for valid reasons are incapacitated—the blind, the old, the deaf—their comfort must be looked after. In the village no one will remain in need or in want. All will live in the utmost comfort and welfare. Yet no schism will assail the general order of the body politic.
"Hence, the expenses or expenditures of the general storehouse are now made clear and its activities made manifest. The income of this general storehouse has been shown. Certain trustees will be elected by the people in a given village to look after these transactions. The farmers will be taken care of, and, if after all these expenses are defrayed, any surplus is found in the storehouse, it must be transferred to the national treasury.
...
"For larger cities, naturally, there will be a system on a larger scale. Were I to go into that solution the details thereof would be very lengthy."
- (Attributed to 'Abdu'l-Bahá, Promulgation of Universal Peace, 2007 edition, at https://www.bahai.org/library/authoritative-texts/abdul-baha/promulgation-universal-peace/22#469722961 )
