Labor is one of the most important source of income in our day. Earnings take the form of an independent professional's income or a laborer's wages. This chapter deals with the zakatability of these two forms of income, neither of which was common at the time of the great scholars who preceded us. This chapter has three sections:

Section one deals with jurists' opinions about the zakatability of this source of income.

Section two deals with the determination of nisab.

Section three discusses the rate of zakah on these incomes.

The three late professors, 'Abd al Rahman Hasan, Muhammad 'Abu Zahra, and 'Abd al Wahhab Khallaf mention this matter in their lecture in Damascus in 1952, and conclude the following: "Income from labor and professions is subject to zakah if it reaches nisab and one year passes. We note that Abu Hanifah, Abu Yusuf, and Muhammad believe that nisab conditions must be satisfied at least in the beginning and the end of the year. On the basis of this opinion, zakah can be imposed on income from labor on a yearly basis. Earnings from labor are zakatable because of the same reason other earning are subject to zakah. The considerations of nisab is also a must, because zakah is imposed on the rich and nisab determines richness. The Hanafites approach to the fulfillment of this condition at the two ends of the year is easy to satisfy.'' Discussing the rate of zakah on different items, the three professors continue, "We know of no case similar to that of zakatability of income from labor and professions in existing jurisprudence. Perhaps the only exception is an opinion from Ahmad that rent, if it is acquired and reaches nisab, is subject to zakah at the time of acquisition, regardless of the condition of the passage of a year. This, in fact, is similar to income from labor, and consequently the latter is zakatable if it reaches nisab. This is in addition to what we remarked earlier upon, that professionals and workers are most likely to have nisab at least at the beginning and end of the fiscal year."1

The conclusion of their analysis is that zakah on salaries applies only to the last month of the year, because they require the fulfillment of the condition of nisab at the beginning of the year and at its end, i.e. they do not imposed zakah on the flow of income itself during the year, but only consider its two ends.

It is rather astonishing that they claim there is no similarity to the case of zakah on salaries in the writings of jurists except for rent, because the most similar case to earnings from labor is the well-known case of earned income, and I believe this similarity is the foundation for the zakatability or labor income. A group of Companions believed in the zakatability of earned income. This includes Ibn 'Abbas, Ibn Mas'ud, and Mu'awiyah. They are followed by a few jurists, such as al Sadiq, al Baqir, al Nasir, and Daud. This opinion is also reported from 'Umar bin 'Abd al 'Aziz, al Hasan, al Zuhri, and al Awza'i. zakah on earned income is discussed in several well-circulated books, including al Muhalla (vol. 6, p. 8), al Mughni (vol. 2, p. 6), Nail al Awtar (vol. 4, p.

148), al Rawd al Nadir (vol. 2, p. 412), and Subul al Salam (vol. 2, p. 129).

It is extremely important to reach a strong ruling on this matter, because earned income is a major category of wealth in our era, including wages and salaries, professional income, gains from invested capital, etc. Earned income may be merely an increase in a zakatable asset, such as a profit from trade assets or increase in the number of cattle or sheep. These increments are added to the principal and become subject to zakah at the end of the fiscal year of the principal. On the other hand, earned income may be the acquired value of an already zakated asset, such as crops sold after zakah is paid on them. This earned income is not subject to zakah until one year elapses, in order to avoid duplication.

Our discussion is restricted to earned income not covered by the two previous cases, such as salaries of laborers, capital gains and its dividends, gifts, etc., whether the earned income is of the same kind as its source or not.

For such forms of earned income, is the passage of one year necessary, or must earned income be added to similar already-owned assets, applying the year of that asset on newly earned in cements? Or should earned income be zakated at the time of acquisition, provided that the necessary conditions such as nisab, non-existence of debts, and being in excess of essential needs, are met? In fact, each of these three propositions is taken up by a few jurists, although it is commonly known among scholars that the passage of one year is a required condition on all zakatable funds, whether they are owned assess or earned income. This is based on the general terms of the sayings on this matter, as understood by many jurists. Consequently, an analysis of these sayings and their indications is indispensable.

The condition of the passage of one year is reported from four Companions, namely, 'Ali, Ibn 'Umar, Anas and 'A'ishah (m), but all these sayings are in fact weak and cannot substantiate the point on hand.

The saying from 'Ali is reported by Abu Daud under the title "Zakah on pastured livestock." Abu Daud says "Sulaiman bin Daud al Muhri informed me that Ibn Wahb told him that Jabir bin Hazim told him (and he named another) from Abi Ishaq, from 'Asim bin Damurah and al Harith al A'war from Ali that the Prophet (p) said, "And if you have two hundred dirhams and one year elapses on them, there is five dirhams [as obligated zakah], and nothing is obligated on you [concerning gold] until you have twenty dinars. When you have twenty dinars, and a year elapses, there is half a dinar [as obligated zakah]. What is above that is by proportion.'' The narrator adds, "I do not know whether 'Ali said 'by proportion' or attributed it to the Prophet (p)." "And there is no obligated zakah on a fund until one year elapses." Jarir says that Ibn Wahb adds in the saying the words "And there is no . . . elapses." Critics of hadith have the following to say:

A. Ibn Hazm, followed by 'Abd al Haq in his Ahkam comments "Abu Ishaq mentions 'Asim and al Harith together in his narration, and al Harith is a liar. It may pass unnoted by that al Harith is the one who extends his narration to the Prophet, while 'Asim does not. Associating them together is incorrect. Su'bah, Sufian, and Mu'ammar narrate the same saying from 'Asim from 'Ali stopping there. This is also the way it is narrated by any trustworthy narrator. If it had been the narration of Jarir that extends the chain through 'Asim to the Prophet, the saying would have been accepted."2

B. In al Talkhis, al Hafiz says al Tirmidhi reports this saying from Abu 'Uwanah from Abu Ishaq from 'Asim from 'Ali, stated from the Prophet.3 I argue that the word of the saying from Abu 'Uwanah does not include the passage of a year. No truth is more evident. Al Tirmidhi reports the following words:

"On each forty dirhams, pay one dirham [as obligated zakah]; nothing is due on a hundred and ninety dirhams, but if it reaches two hundred dirhams, pay its due zakah, five dirhams."4

C. 'Asim himself is not free of criticism. Al Mundhiri, in his Mukhtasar, says5 "Al Harith and 'Asim are not accepted." Al Dhahabi says "The four report his narration, Ibn Ma'in and Ibn al Madini grade him trustworthy. Ahmad grades him higher than al Harith, and to me he is accepted." Al Nasa'i says he is all rights. On the other hand, Ibn 'Adi says he is singled in several sayings from 'Ali; the problem comes from him. Ibn Habban says that "He had a bad memory and made very bad errors. He often attributes the statements of 'Ali to the Prophet, and he deserves to be abandoned . . . . Anyhow he is better than al Harith."6 This supports the opinion of al Mundhiri.

D. The saying has a defect in its chain, referred to by al Hafiz in al Talkhis.7 He warns, "The saying just mentioned from Abu Daud has a defect discovered by Ibn al Mawaq: Jarir did not hear from Abu Ishaq. Trustworthy disciples of Ibn Wahb, namely Suhnun, Harmalah, Yunus, and Pahr narrate it from Jarir from al Hasan bin 'Amarah from Abu Ishaq. It seems that Sulaiman made the mistake of omitting the name of al Hasan bin 'Amarah, who is agreeably abandoned"8 Al Hafiz does not criticize the opinion of Ibn Mawaq, which indicates that he probably changed his opinion, mentioned earlier in al Talkhis itself, that "the saying from 'Ali is all right as far as its chain is concerned; it is supported by other narrations, to the extent that makes it an acceptable evidence."9

Al Tirmidhi reports from Abd al Rahman bin Zaid bin Aslam from his father from Ibn 'Umar that the Messenger of God (p) said, "He who earns income is not subject to zakah until a year elapses, as prescribed by his Lord." Al Tirmidhi also reports from Ayub from Nafi' that Ibn 'Umar said, "He who earns income . . . . " etc., without ascending it to the Prophet. Al Tirmidhi says that the last saying is more correct than the saying from 'Abd al Rahman. Ayub and 'Ubaid Allah bin Umar and others narrate from Nafi' from Ibn 'Umar the same saying as being said by Ibn 'Umar. 'Abd al Rahman is graded weak by Ahmad, Ibn al Madini, and others. He makes frequent mistakes.14 The narration of 'Abd al Rahman is reported by al Daraqutni and al Baihaqi; al Baihaqi, Ibn al Jawzi, and others conclude that as ending at Ibn 'Umar, the saying is correct.

[meaning it is not attributed to the Prophet]. Al Daraqutni mentions among the peculiarities of Malik, the same, and comments that "the saying is weak." However, Malik has a correct narration that stops at Ibn 'Umar. Al Baihaqi reports statements of Abu Bakr, 'Ali, and 'A'ishah similar to that of Ibn 'Umar, and says we can count on those of Abu Bakr, 'Uthman, Ibn 'Umar, and others.15

This makes it clear that there is no authentic saying supporting the condition of the passage of a year regarding earned income, as confined by al Baihaqi. Even if there were a correct saying about the year, it would be applied to assets other than earned income, in order to compromise the different texts together. However, it is agreed upon that any zakatable item must not be charged another zakah until one year elapses. In this sense, zakah is yearly. Saying that imply zakah is not imposed until one year elapses may be interpreted in this manner, as was explained in detail in chapter one of this part. Lastly, the fact that the Companions are not agreed on this condition with regard to earned income implies that there was no correct text.

It is reported correctly from al Qasim bin Muhammad that Abu Bakr did not take zakah from any fund until the year had elapsed. Amrah bint 'Abd al Rahman narrates from 'A'ishah that "No zakah is due until a year elapses" regarding earned income. 'Ali is reported to have said, "He who earns income is not obliged to pay zakah on it until one year passes." A similar statement is reported from Ibn 'Umar.16 On the other hand, Ibn Hazm quotes Ibn Abi Shaibah and Malik in al Muwatta as saying "It is correctly reported from Ibn 'Abbas that zakah is obligated on any income when acquired by any Muslim."17 Ibn Mas'ud and Mu'awiyah, both Companions, and 'Umar bin 'Abd al 'Aziz, al Hasan, and al Zuhri, Followers, are also reported to obligate zakah on earned income when acquired.18

It is known that when the Companions differ on an issue, the matter is rendered to other texts and to the general principles of Islam. No one can claim any ijma' on such a disputed matter.

A. Ibn 'Abbas Abu 'Ubaid reports from Ibn 'Abbas about a man who earns income, "He must pay its zakah the day he earns it.19 Similar statements are reported by Ibn Abi Shaibah.20 The report is correct from Ibn 'Abbas, as confirmed by Ibn Hazm. It obviously does not require the passage of one year for zakah to be obligated, as understood by most people from Ibn 'Abbas. Abu 'Ubaid disagrees, sayings that "People understand that Ibn 'Abbas meant gold and silver, but not believe that. In my opinion, Ibn 'Abbas knows better than that, because such a view would put him in opposition to the majority of people, I guess he only meant crops of agriculture, because people of Madinah call lands 'mal' [the word used in the saying of Ibn 'Abbas] and there seems to be no other interpretation to his statement"!21

Abu 'Ubaid is undoubtedly a leading expert in financial affairs and has a good insight into zakah, but I believe that his interpretation of Ibn 'Abbas view is weak. It contradicts what immediately comes to mind and the understanding of most scholars. If it were simply related to agricultural crops, nothing would be new about this statement and it would not be worth being pointed out by many people as distinguishing Ibn 'Abbas. In principle, words must be taken to mean their apparent meaning, except when that becomes impossible. Is there anything in this statement that prevents us from taking the apparent meaning of mal? The reason cited by Abu 'Ubaid is not acceptable for the following points:

Firstly, Ibn 'Abbas is not alone in this opinion. Both Ibn Mas'ud and Mu'awiyah agree with him, in addition to some Followers.

Secondly, a Companion who exerts efforts to find a Shari'ah ruling is not required to wait for agreement or approval of other scholars to express his or her own conviction.

Thirdly, a Companion may even be alone in expressing certain opinions, and this is not unusual in the history of jurisprudence. The fact that Ibn 'Abbas was alone in expressing this opinion must not be an excuse to twist the apparent meaning of his words to make them consistent with the opinions of other Companions.

At last, we must note that Abu 'Ubaid does not as certain his interpretation, because he uses the words "I guess." B. Ibn Mas'ud Abu 'Ubaid also reports from Hubarrah his saying that "'Abd Allah bin Mas'ud used to give us salaries in small bags and to collect zakah from them."22 Abu 'Ubaid also interprets this collection as related zakah that was due on assets other than these salaries.

This interpretation seems to be very far-fetched. It contradicts the apparent meaning of the statement. Moreover, it is also in contradiction with correct reports from Ibn Mas'ud which provide the obvious explanation. Hubairah says "Ibn Mas'ud used to collect zakah on salaries at the rate of twenty-five from each one thousand," as reported by Ibn Abi Shaibah,23 and al Tabarani.24 This explanation of the practice of Ibn Mas'ud is reported by Hubairah himself, but one may assume that Abu 'Ubaid did not hear of this second report.25

E. The subjection of earned income to zakah is reported from al Zuhri, al Hasan, and Makhul, also mentioned is Ibn Hazm. Some of these reports will be mentioned in the next section. The same is also reported from al Awza'i. Even Ahmad is reported to have said similar things concerning rent on land. The author of al Mughni says "Ahmad and several others say that rent should be zakated when earned."23

F. Al Baqir, al Sadiq, al Nasir, and Daud The view of the first three scholars from the descendants of the Prophet, and that of Daud, is that whoever earns the equivalent of nisab must pay its zakah immediately.30

They argue that this is based on general texts which obligate zakah on money, such as the saying "[There is obligatory zakah] on currency, one-quarter of one-tenth." Agreed upon.

This removes the condition of the passage of one year, according to these scholars.

nisab need only be fulfilled at the end of the year, as is apparent from the practices of the Prophet and his zakah collectors in taking zakah at the end of the year, without keeping records of the beginning of the year.31

Ibn Hazm mentions that Abu Hanifah believes that earned income is not zakatable until a year passes, except when the owner has assets of the same kind as the earned income, in the amount of nisab from the beginning of the year. In this case, earned income is added to the assets in the calculation of zakah. Malik has a similar view on the requirement of the passage of a year regarding the presence of assets of the same kind, except when it comes to livestock. If the owner of livestock has assets of the same kind of animal from the beginning of the year in the amount of nisab, the total becomes zakatable at the end of the year. Al Shafi'i says earned income needs the condition of the passage of a year for zakatability, except in the case of baby cattle, provided that their mothers reach nisab.32

Ibn Hazm objects to all these opinions, describing them all as erroneous, and says "Their differences are themselves evidence that they are not based on solid proofs. They are all empty claim not supported by Qur'an, Sunnah, ijma', qiyas, or rationality that can stand on its feet." Ibn Hazm himself considers the condition of the year obligatory with regard to all items, whether assets or earned income, thus contradicting his colleague Daud, who does not require this condition regarding earned income.

In view of the texts on zakah in general, its objectives, and the general interests of Islam and Muslims, I believe earned income, whether salaries, wages, professional income, or return on capital invested in other than trade, such as shipping, planes, and hotels, is zakatable when received, without the requirement of the passage of one year.

This opinion is substantiated by the following points:

1. The requirement of the passage of one year with respect to all funds, including earned income, is not based on any correct or good saying, which is necessary in order to derive a ruling in Shari’ah, or to restrict one of its general texts. All that exists are opinions of some Companions.

2. Companions and Followers did not agree on requiring the passage of one year on earned income. Some obligate zakah when earned income is acquired. When Companions and Followers differ, no one can claim that the view of some must be taken, and the issue must then be settled by other texts in accordance with the general principles of Islam. God says, "If ye differ in anything among yourselves, refer it to God and His Apostle."33

3. The lack of a text or ijma' allows for schools of jurisprudence to disagree on the issue of earned income to such a degree that Ibn Hazm accused them all of being mere claims, unfounded on correct texts from Qur'an Sunnah, ijma' analogy, or sound rationalization. I myself have examined these differences as well as differences on the same issue inside each school of thought, and noted many unnecessary details and complications, so many that I do not believe it is at all likely that our easy-flowing Shari’ah, which is addressed to all people, can accommodate such minute, complicated details, especially with regard to one of its essential and more predominant pillars.

4. The view that the passage of one year is not required with regard to earned income is in fact closer to the generality of the texts. Texts of Qur'an and Sunnah that obligate zakah are general and absolute, and do not mention a condition of the passage of a year, such as the sayings, "Bring in one-fourth of one-tenth of your amwal" and "On money, one-fortieth is required." This is also supported by the general implication of the verse, "O ye who believe, give out of the good things which ye have earned.34 Earning in the verse is general, and applies to trade, professional, or employment. Jurists use this verse to support the zakatability of trade; why can we not use it to support the zakatability of earned income. When jurists require the passage of one year with regard to zakah on trade assets, it is only to allow for the principal to produce its earnings. The case of salaries is different. They are earned when they are received.

5. Sound analogy also supports our view. Earned income is most similar to crops and fruits when harvested; if farmers, even those who have rented the land, are charged on-tenth or one-twentieth, why not charge employees and physicians one-fortieth of their earnings, especially since God associates earning with the produce of land in the above-quoted verse that continues, "and of the fruits of the earth which we have produced for you." Why should we treat differently things that God associates together, while both of them are of the same grace of God. It is true that the grace of God is more dovioce in the produce of the earth, and consequently gratitude for that is more stressed, but this is not a sufficient grounds for exempting the other earnings from the obligation of zakah. The difference in applicable rates is sufficient reflection of the difference in the emphasis of thankfulness.

At the end of this section, and in fairness to contemporary Muslim writers, it is imperative to mention the opinion of Shaikh Muhammad al Ghazali, presented in his book, Islam and Economic Issues, more than twenty years ago. After stating that zakah is either on the stock of capital--such as zakah on money and business assets-- or on income--such as crops and fruits--continues.

The conclusion is that whoever has an income equal to that of zakatable formers must be subject to zakah on equal footing regardless of capital and related conditions. Consequently, physicians, lawyers, and other professionals and employees are subject to zakah on their income for the following two persons:

Firstly, the general texts: The verse "O ye who believe, give of the good things which ye have earned."39 There is no doubt that the income of those categories is included in good earning referred to in the verse. It is by this obligatory spending that they become integrated among believers described in the verse, "Who believe in the unseen, are steadfast in prayers, and spend out of what We have provided for them."40

Secondly, it is beyond imagination to assume that Islam may impose zakah on a poor farmer and exempt the owner of buildings that produce manifold the income of the farmer, or a physician whose daily income may equal that of the farmer for one full year.

Accordingly, zakah must be obligated on all of them as long as they share the same reason for zakatability. This form of analogy does not accept hypocritic manipulation. A question may arise regarding the calculation on zakah and its rates.

Its answer is found in the rules of zakah themselves. The rate of crops and fruits is one-tenth or one-twentieth, according to efforts involved in irrigation. zakah on income may likewise be related to efforts in earning. It is always possible to make details and refinements once the principle is agreed upon, although such an exercise must be done by a group of scholars.41

These are excellent words that reflect depth in understanding Islamic principles. The two substantiating arguments given by al Ghazali are undoubtedly strong, but the approach I selected in this chapter in providing evidence from the practice of some Companions and Followers is more consistent with jurists' methodology. Even though our results may not have precedents in the four known schools of jurisprudence, we are not obligated to follow any of these schools.42

Zakah is only imposed on the rich, in order to realize the meaning of the excess or surplus, mentioned in the Qur'an as the subject of spending. "They ask thee how much they are to spend; say, 'what is beyond your need.'" The Prophet (p) also says, "No sadaqah is obligated except out of richness.'' All this requires the condition of nisab for zakatability. What should nisab be in regard to earned income? Al Ghazali, as quoted at the end of section one, determines this nisab as the equivalent of nisab of grains and fruits, but who can be sure whether or not this nisab was set for a special purpose related to agricultural products? Why not take the nisab of money, which is 200 dirhams of silver, 20 dinars of gold, or its equivalent, i.e., eighty-five grams of gold, especially since earned income is usually paid and calculated in money terms?

Since we are talking about a flow of income, the question arises of whether there is any time span through which income accumulates with regards to the amount of nisab, especially since earned income is paid at intervals, sometimes equal like salaries, and other times not equal, like physician's fees. There are two opinion on this matter.

The first is that each amount of earned income is considered alone when it is received. Monthly salaries, if they reach nisab or more, are zakatable, payments received by professionals that equal, each one alone, nisab, are zakatable, while small income or segments of income received at short intervals are not zakatable, except for the payment that is equal to nisab or more. This opinion apparently exempts small salaries and wages from zakah. It is consistent with the apparent meaning of the report about the practice of the Companions and Followers. On the other hand, many highly paid professionals, such as physicians, receive their income in small increments that add up to large amounts in one week and perhaps one day. Shall all these small amounts be exempted from zakah while a salaried employee whose monthly income is just above nisab is zakatable? This explains the merits of the second opinion.

The second opinion is that increments of income and other earned funds must be added to each other as long as they are received at short intervals. We noticed earlier that when talking about minerals, jurists state that increments of an ore extracted at short intervals are added together in order to make nisab. The same thing also applies in the case of several crops of the harvest of the same year.43 Consequently, the year must be considered as the time for the calculation of nisab, i.e. earned income received during the whole year is added together and nisab is considered on the basis of yearly income.

In fact, a period of one year occurs in zakah studies on more than one occasion, like the condition of the passage of one year. It is useful at the end of this sub-section to mention some of the reports from our predecessors about how earned income is zakated.

Al Zuhri is reported to have stated, "If a person earns income and wants to spend it before the end of his fiscal year, he must pay its zakah then spend it. But if he plans to save it, then he must wait to pay zakah on the total at the end of his fiscal year."44

Similarly, it is reported from al Awza'i that money received from the sale of nonzakatable items, like a residential house or a slave, must be zakated when received, except when the payer has already established a fiscal year with respect to zakah, in which case the zakah of the acquired money can be postponed till the end of the year.45

Makhul is reported to have said that if a person has an established fiscal year, earned income that is spent before the end of this fiscal year is not zakatable, but funds received in the months when zakah becomes due must be included in the calculation of zakah. When the person does not have an established zakah year, earned income must be zakated when acquired.46

Zakah on earned income applies on its net amount. Debts and a minimum standard of living for the income earner and his family are deductible, because they are among essential needs, and zakah is only obligated on a nisab that is above essential needs.

Business expenses, for professional and other income earners are also deductible, in accordance with the view I select with respect to farming and palm trees that zakah is due on the residual after payment of expenses.47 This is the opinion: of 'Ata and others.

After the above-mentioned deductions have been made if the residual of salaries or other earned income reaches during the year an amount equal to the nisab of money, then this residual is zakatable. That exempts small earnings and wages.

It should be noted that if earned income is zakated when received, the next zakah is not required untill one new year elapses, since two zakahs cannot be imposed in one year. When a person has an established fiscal year with respect to his or her zakah. He or she may delay the payment of zakah on earned income untill the end of that fiscal year. To give an example, a person earns income in the second month of his fiscal year, and pays its zakah as he earns it. zakah on the part saved from this earned income is not due at the end of the twelfth month of the fiscal year during which it is earned, but becomes due the next year on all assets then owned.

Al Ghazali calls for collective research on the part of Muslim scholars to determine the applicable rate on earned income. My personal opinion is to distinguish between earned income resulting from capital investment alone, earned income resulting from capital and labor together, and earned income resulting from labor alone.

Income that is earned as a return on capital or on capital and labor together is charged one-tenth of the net income, after the deduction of all expense, debts, and allowance for essential needs. This is in analogy to agricultural crops produced without irrigation costs. It applies to returns from factories, buildings, printings facilities, hotels, renting cars, transportation business, and the like. I mentioned earlier the opinion of Abu Zahra and his two colleagues that the rate of zakah on buildings and factories should be ten percent of the net income, if expenses and costs are determined and deducted, or five percent of gross income if expenses cannot be determined. This distinction is--in my opinions acceptable. It is noted, however, that capital in this regard does not include trade assets discussed earlier in chapter four.

Income that results from labor alone, such as employment compensation and professional income has a rate of one-fourth of one-tenth only, in application of general texts that obligate a rate of 2.5% on money, whether it takes the form of assets or earned income. It is also in accordance with the Islamic principle of reducing the applicable rate in proportion to effort spent, and with the practices of Ibn Mas'ud, Mu'awiyah, and 'Umar bin 'Abd al 'Aziz. Analogy of salaries and professional income with salaries paid by those leaders is much more sound than a claimed analogy with income from farming.

On the other hand, income from farming may be closer to income from buildings and factories.

Lastly, the distinction means that income from labor is treated with consideration of effort spent , which reduces the rate as compared to income from capital. This is a principle also followed by contemporary taxation systems, in which it is considered just to charge higher rates on the return of capital than on employment income.48