The views expressed in our content reflect individual perspectives and do not represent the official views of the Baha'i Faith.
O my friend! In all circumstances one should seize upon every means which will promote security and tranquillity among the peoples of the world. The Great Being saith: In this glorious Day whatever will purge you from corruption and will lead you towards peace and composure, is indeed the Straight Path. – Baha’u’llah, Tablets of Baha’u’llah, p. 171.
You hear this political and policy debate a lot lately: flat tax or progressive tax?
A flat tax system has one constant marginal rate: the rate stays the same, regardless of income. People pay the same fixed percentage, no matter how much they make. Thirty-nine countries in the world have flat tax systems. Most of them are small countries, with two exceptions: Russia and Saudi Arabia.
A progressive tax system has a graduated rate: the tax rate rises as the taxable amount increases. People with lower incomes pay a lower percentage of their income in taxes—or no tax at all. Progressive taxation, economists and experts agree, reduces income inequality. The overwhelming majority of the world’s countries have some form of progressive taxation.
Which system do you think is the fairest?
The Baha’i teachings advocate a progressive tax system:
For example, a rich person has a large income and a poor person a small income. To put it in a more explicit way: a rich person has ten thousand kilos of products, and a poor person has ten kilos. Now is it fair to tax them equally? Nay, rather, the poor person in this case must be exempt from taxes. If the poor person gives one-tenth of his income and the rich person one-tenth of his income, it will be unjust. Thus in this way a law should be made that the poor person who has only ten kilos and needs them all for his necessary food, be exempt from paying taxes. But if the rich person, who has ten thousand kilos, pays one-tenth or two-tenths taxes on his products, it will not be a hardship to him. For example, if he gives two thousand kilos, he will still have eight thousand kilos. If a person has fifty thousand kilos, even though he gives ten thousand kilos, he will still have forty thousand kilos. Therefore, laws must be made in this way. – Abdu’l-Baha, Star of the West, Volume 4, p. 83.
Progressive taxation, Baha’is believe, represents a more humane way to administer any government:
…the income tax must be collected in the following manner, for example: When all the income of a person amounts to $500.00 and his necessary expenses amount to $500.00, he should be exempt from paying taxes. Another person whose expenses amount to $500.00, but his income is $1,000.00, should pay one tenth of his income for taxes, because he has more than he needs for his living and can afford to pay one tenth of his income without trouble. Another person whose expenses are $1,000.00 and his income, $5,000.00, should give one and a half tenths of his income, because he has more than he needs. Another person whose necessary expenses are $1,000.00, and his income is $10,000.00, should give two tenths because he also has more than what he needs. Another person whose expenses are $4,000.00 or $5,000.00 and his income is $100,000.00, should give one fourth. Another person, whose income is $200.00, and his actual needs, just to exist on, amount to $500.00, who does his best in his work, but has had poor luck with his crops, such a person should receive help from the storehouse, that he may not starve, but have a decent living.
In every village the necessary means of support for all the orphans must be appropriated from the storehouse. Also for the aged, the helpless, the unemployed, education, public health—for all these, appropriations must be made from the storehouse. – Abdu’l-Baha, Star of the West, Volume 9, p. 347.
From a Baha’i perspective, though, any income tax plan must be a fair and all-inclusive one. In most countries today that levy an income tax, a pattern of deductions, exemptions and adjustments have made their way into the tax code, creating favoritism for certain income brackets, investments and types of income. Heavily influenced by paid special-interest lobbyists, legislatures have often created carve-outs, limitations and exclusions that unjustly benefit some but not others.
The Baha’i teachings say these inconsistent, unfair exceptions circumvent the principle of equal justice.
Instead, the impartial, universal Baha’i principles of taxation, after adjusting for income, do not allow evasion of responsibility, or laying a burden of payment on any economic class greater than justice would allow.
In the past, many nations unfairly exempted the wealthy from taxation, and therefore laid the largest part of the tax burden on the middle classes—wage earners, professionals and those who labored for their living. Currently, the hodge-podge of varying national taxation policies and the proliferation of tax havens have allowed the very wealthy, both individuals and corporations, to use quasi-legal methods to minimize or even entirely escape any taxation. This unjust current condition, Baha’is believe, will only disappear when humanity builds a just international tax system run by a democratically-elected global government committed to world peace:
Implements of war and death are multiplied and increased to an inconceivable degree, and the burden of military maintenance is taxing the various countries beyond the point of endurance. Armies and navies devour the substance and possessions of the people; the toiling poor, the innocent and helpless are forced by taxation to provide munitions and armament for governments bent upon conquest of territory and defense against powerful rival nations. There is no greater or more woeful ordeal in the world of humanity today than impending war. Therefore, international peace is a crucial necessity. An arbitral court of justice shall be established by which international disputes are to be settled. Through this means all possibility of discord and war between the nations will be obviated. – Abdu’l-Baha, The Promulgation of Universal Peace, p. 317.
Next: How Do We Really End Corruption?