The recent Oxfam report reveals a staggering increase of $42 trillion in wealth among the richest 1% over the past decade, while taxes on them have reached historic lows. The widening wealth gap between the rich and the rest of the population leads to severe economic inequality.
This disparity undermines social cohesion and can result in increased social unrest. When a small fraction of the population controls a vast portion of the wealth, it limits economic opportunities for the majority, exacerbating poverty and reducing upward mobility. Further, low taxes on the wealthy mean that governments have fewer resources to fund essential public services like healthcare, education, and infrastructure.
This fiscal imbalance can lead to budget deficits and cutbacks in services that are crucial for the well-being of the general populace, further entrenching inequality.
Disproportionate wealth concentration also translates into disproportionate political influence. The top 1% can use their financial power to shape policies and regulations in their favor, often at the expense of the broader public interest, hurting the most vulnerable the most – leading to a cycle where policies increasingly favor the wealthy, perpetuating their dominance and the marginalization of others.
From a moral standpoint, the extreme accumulation of wealth by a few, while millions struggle to meet basic needs, raises significant ethical questions. From the financial stand point if the wealth accumulates with a few the demand falls and the economic growth slows down. Extreme inequality can hinder sustainable economic growth. A more equitable distribution of wealth can stimulate economic activity, as more people have the means to participate in the economy.
Both from a moral and a functional standpoint, society must consider the principles of fairness and justice in the distribution of wealth. Ensuring that everyone has access to opportunities and resources is fundamental to a just society and a sustainable economy.
Imam Ali ibn Abi Talib’s teachings in Nahjul Balagha provide valuable guidance for addressing such issues. It advocates for a just, fair, and a balanced approach to taxation and the redistribution of wealth, ensuring the welfare of all citizens and maintaining economic and social stability. Imam Ali(as) emphasizes that taxation should be just and fair. He also stated, “You should be careful in managing the revenues and the finances of the state and take care of the prosperity of the taxpayers.”
Effective policies should thus include social programs funded by fair taxation to reduce poverty and provide equal opportunities. Imam Ali advocates for the redistribution of wealth to support the needy and vulnerable sections of society, ensuring that wealth circulates among all segments of the population, particularly the poor – which boosts the demand in the economy and increase the levels of economic growth, benefitting the rich and the poor alike.
It also suggests that tax payers should be justly taxed and not unduly burdened. Moreover, it is the duty of the governments to ensure that tax payers see, feel and understand the benefits of paying taxes, calling for a transparent and honest use of taxes.
He advises rulers to ensure that taxes do not become a burden on the citizens. In one of his letters to Malik al-Ashtar, the governor of Egypt, he states; “Beware! Do not act like a beast of prey over your subjects and do not treat them like your slaves. Be just and fair with them in respect of taxes.”
This is advocating that taxes should be levied in a manner that ensures the sustainability of the economy and the well-being of the people. The persisting and the growing inequality that perplexes us is a result of the taxes being inequitable and therefore the solution lies in equitable taxation. Imam Ali advised that tax collection should be balanced so as not to impoverish the populace.
Imam Ali warned against oppressive taxation practices, arguing that unjust tax practices harm social harmony and increase inequality. Governments should implement tax reforms that ensure that the wealthy contribute adequately to public welfare.
In the present global context, this is a clear advocacy of progressive taxes on all sorts of income, including on profits. Equitable distribution of wealth was a core principle for Imam Ali, taking from him, taxes should be levied in direct proportion to the wealth of an individual. The wealthiest should be paying a higher percentage of their wealth holdings as taxes as compared to the not so wealthy.
For instance the Oxfam international report on India says that taxing India’s ten richest people at 5 percent can ensure universal schooling in India. Globally, billionaires are estimated to be paying less than 0.5 percent of their wealth, sadly, we are doing the exact opposite of what needs to be done.
In his governance guidelines, Imam Ali stresses the importance of public welfare and the equitable distribution of resources. He advises that revenues collected through taxes should be used for the common good, including public services and infrastructure. He emphasizes the accountability of rulers in managing public funds. The proper use of tax revenues for the benefit of society is a recurrent theme in his sermons and letters.
Imam Ali emphasized the necessity of accountability and integrity in governance. He advised, “Be not a treasurer for the benefit of others and refrain from making any misappropriation or embezzlement.” Transparent and ethical management of public funds is crucial for maintaining public trust and ensuring that the tax revenues are used effectively.
Imam Ali stressed the state’s responsibility to ensure the needs of the poor are met. He said, “If a man in your domain is hungry, it is your duty to feed him.” Policies should provide comprehensive social safety nets, including healthcare, education, and basic income support, funded by equitable taxation. Stressing that wealth should circulate among all segments of society, not just the rich. He encourages the rulers to ensure that resources are fairly distributed, so the poor are not left destitute.
Following Nahjul Balagah, the rights of the needy must be protected, ensuring they have access to basic necessities such as food, clothing, and shelter. Imam Ali emphasizes the importance of safeguarding these rights through just governance and social policies. Ensuring fair wages and just treatment for workers is a critical aspect of supporting the needy. Imam Ali advocates for the rights of laborers to be respected and for their compensation to be fair and adequate.
Imam Ali’s provisions for the needy are rooted in a broader ethical and philosophical framework that prioritizes social justice, compassion, and accountability. His teachings reflect a deep commitment to ensuring that the most vulnerable members of society are cared for and that the principles of equity and justice are upheld in all aspects of governance.
Nahjul Balagah outlines comprehensive provisions for the needy. Imam Ali’s teachings offer timeless principles for modern economic challenges. Fair and just tax collection, avoiding oppressive practices, equitable wealth distribution, maintaining accountability, and providing for the needy are essential components of ethical governance.
By incorporating these principles, policymakers can address the growing wealth inequality highlighted in the Oxfam report, fostering a more just and equitable society. Implementing such policies would reduce disparities, promote social cohesion, and ensure economic stability.
