Buffalo Bull

Issue E.1 — Tuesday, 2011.09.06

The Jubilee Tax; The Jubilee and Sabbatical Sunsets

From childhood, most Americans (that is, those in the U.S.A.) are taught that Americans are somehow “better” than others. This belief even has a name, American exceptionalism. (The doctrine is, technically, that the U.S.A. is “different”, but in most cases that is taken to mean “better”.) Among what is taught to children is that America is superior because it lacks class distinctions, especially those associated with the aristocracy of the Old World. Americans pretend that they're all equal to a great extent, and that America is a land of (almost) equal opportunity. Certainly, they tend to believe that it's better than in other countries.

The reality, of course, is that Americans live in a country with about the same social and economic mobility as the U.K., and with less than many other European (and other) countries. The reasons this is so are many, and I will not discuss them here. Suffice it to say that the best predictor of one's income is the income of one's parents. The best predictor of one's social skills is the social skills of one's parents. The best predictor of one's connections and contacts is the connections and contacts of one's parents. And so on, for one's values, health, class, and other attainments. The American style of aristocracy is not much more flexible than the British style.

This situation may or may not bother you. Maybe you attribute it to karma, to God's plan, to the random nature of the Universe, or to the general and differing moral fibre of people. Perhaps you feel that little or nothing can be done practically to improve on a legacy inherited from accidents of birth.

Among some who consider this state of affairs to be suboptimal, the debate about solutions and strategies can be passionate and heated. With the proposal I offer below, I step more deeply into the fray.

The Hebrew Bible (the tanak, or תנך‎), more or less equivalent to the Christian “Old Testament”, describes two institutions which are mostly forgotten today. They are the sabbatical (Heb. shmita, or שמיטה) and the jubilee (Heb. yovel, or יובל). These are cousins of the more common institution of the sabbath (Heb. shabbat, or שבת). I begin with these, not because I consider the Bible as an authority, but rather because yovel and shmita are, to me, fascinating and simple mechanisms, worthy on their own merits of consideration.

First, some background. Then, the proposal.


Every seventh year is a sabbatical year. There are three major aspects of the sabbatical year under Jewish law. One is a requirement that land lay fallow during such a year, and most agricultural activity is forbidden. The second relates to personal debts, which must be forgiven at the end of the year. The third aspect is the required release of indentured servants or slaves, unless they choose to remain voluntarily. There are various ancillary rules mostly pertaining to the use, processing, and consumption of agricultural products.

Of course, where there are laws, there are lawyers. Over time, a variety of loopholes, exceptions, and detailed interpretations arose. For example, you cannot plant tomatoes in the ground, but you can grow them hydroponically, because hydroponic tomatoes are not connected to the ground and thus do not fall under the strict interpretation of the rules. Similarly, you can temporarily sell your land to a non-Jew, who can cultivate it, because non-Jews are not bound by the rules. There is a loophole regarding debt collection, which allows you to give the debt to the community and, because it is no longer a “private” debt, collect it after the end of the year. There are sometimes heated disagreements over the validity of some of these exceptions and loopholes, and not everyone recognizes all of them.

You might immediately think of some “adverse” consequences of, or at least difficulties with, these laws. For example, if you expect to eat well during the sabbatical year, you might do some planning and preparation. As expected, the system mostly eliminates long-term debt (over six years), and makes getting a loan more difficult just prior to the sabbatical year.

In the following, I want to consider the basic idea of debt forgiveness, ignoring the other parts of the rule. For the most part, I also want to ignore what are often considered the most important aspects of the rules, the spiritual implications, not because I think they are unimportant but rather because they are not within the scope of this proposal.


The jubilee occurs every forty-nine years, but some say it is every fifty years. The reason the exact length is debated is due to a ambiguities in the codification of the rules, and also because, for technical as well as practical reasons, it hasn't been celebrated for a couple thousand years.

The most distinctive aspect of the jubilee is the redistribution of land: all land is returned to the original owners every jubilee year. In an agricultural society, this was tantamount to a major wealth redistribution, since the most significant asset held by the people was land. As with the sabbatical, there are exceptions and loopholes. For instance, city dwellers are exempt from the land redistribution rule.

There is also a release of servants and slaves at the jubilee. The rabbinical interpretations explain that certain types of servants were released at the jubilee, and other types at the more frequent sabbatical. This classification depended on whether they became servants or slaves by selling themselves, in order to pay a debt, as punishment, or for other reasons. The thrust of the rules seems to be that involuntary servitude cannot exceed six years, while voluntary servitude (basically, an employment contract) cannot extend beyond the next jubilee.

Spirit of the Laws

Details and spiritual implications aside, the impact of the sabbatical and jubilee laws was obviously a limitation on the duration of debts, servitude, and other obligations, as well as a limitation on the extent of wealth concentration. It is these aspects, the limitations, which have intrigued me and which lead to what follows.

The limitations on length of servitude are also limitations on the length of contracts. At the time these laws were instituted, servitude was, perhaps, the main type of long-term contract outside of debt. Although the limitations are expressed in terms of servitude, I take the rules as having been meant to apply to all extended obligations. That is, they apply to contracts in general.

The jubilee began when the Israelites entered the “Promised Land”, that is, the land which was supposedly promised and given to them by God. When the land was initially distributed, there was presumably some fairness to the process. (Most conventional wisdom holds that God is fair, though perhaps in unfathomable ways.) One usually imagines that fairness was strongly correlated with evenness. As forty nine or fifty years passed, the distribution would become increasingly uneven. The jubilee would make a correction, and would thwart excessively uneven or unfair distribution of wealth.

Similarly, contracts often yield unequal benefits to the parties, for various reasons. Over time, these contribute to the general inequities. A limit on the duration of a contract is an escape clause, allowing an eventual end to an unfair obligation, reward, or situation.

The jubilee restributed land, but not other assets such as cattle or personal possessions. In an agricultural society, this was somewhat equivalent to the redistribution of the primary form of capital, which was used to create other wealth. Today, an economist would consider cattle to be capital. I believe that a consistent way of viewing the jubilee rules is that all scarce capital was redistributed. To an economist, a good is scarce if it exists, in practical terms, in limited quantities. There is only so much land, so land is scarce in the economic sense. The Hebrews would have imagined cattle, however, to be possibly unlimited in number. In other words, there is no imaginable limit to the number of cattle, given enough time.

Adapting Portions of the Sabbathical and Jubilee to Secular, Industrial Society

In an agricultural society such as was found in early Israel, the cyclic natures of the sabbatical and jubilee are much more practical than they would be in the urban, industrial culture within which most of the world's people now live. Indeed, the old laws acknowledge the impracticalities in some situations. For example, city dwellers did not participate in the jubilee land redistribution.

Accordingly, I propose the implementation and modification of only two of the sabbatical and jubilee rules. The others are important, but this proposal is for a secular world, a largely urban and industrial society and culture. Although I happen to believe that the spiritual benefits of the original institutions exceed the secular benefits, I do not seek to impose spirituality on anyone. Nevertheless, even my offered simplification is likely to be a hard sell.

The Jubilee Tax

A 49-year cycle of wealth redistribution, with the entire planet in lockstep, is almost inconceivable. I suggest, instead, a “steady” implementation. Instead of redistributing all capital once each 49th year, I suggest that it be redistributed more often, depending on the type of good, but at the same rate. For example, I propose redistribution of one-49th (1/49) each year for goods which are redistributed each year, and two-49ths (2/49) each year for goods which are redistributed every two years. Thus we have what might be called one-year jubilee assets, two-year jubilee assets, and so on. The frequency for each good would depend on practical considerations, but should in no instance should the distribution interval exceed seven years.

Rather than physically redistributing the asset, instead I suggest imposing a tax equivalent to the fraction of the value. The tax thus collected is to be distributed equially to everyone. The overall jubilee tax rate will always be 1/49th, or about 2.040816 per cent, over any seven years. For clarity, I'll just call it two percent.

Unless you are absolutely and completely impoverished, you will be both a taxpayer and a tax recipient. Some will be net payers, some will be net recipients. The dividing line will be at the average wealth level. In other words, if you have less than average wealth, you will pay no tax on net, and if you have greater than average wealth, you will pay more tax than you receive. Effectively, each person will pay net tax on his above-average wealth, but will not pay on his below-average wealth.

As a practical example of how this might work, let us assume that it is implemented only in the U.S.A., and only on real estate. There are various estimates of the total value of real estate in the U.S.A., but I'm going to use for illustration a conservative figure of $45 trillion. (That number is from an analysis by Karl E. Case, for 2005. It includes both land and buildings. Most, $34 trillion, is residential; $11 trillion is commercial.) There are about 312 million people in the U.S.A., so there is about $144,000 in real estate for each person. Therefore, each person with less than $144,000 in real estate would receive 2 percent of the amount below $144,000, and each person with more than the average would pay 2 per cent of the amount in excess of the average. A person with no real estate would receive $2,880 in tax (2 per cent of 144,000). A person with a million dollars in land and buildings would pay $17,120 (2 percent of (1000000 minus 144000)).

Note that the previous example is for a single individual. A couple, family, or other household would benefit or suffer proportionally to the number of its members.

Obviously, the process described in this simple example would not be practical. For instance, if the tax were collected on some types of assets, but not on others, then people would avoid the jubilee assets in order to minimize their tax bills, thus distorting the markets. Therefore, the tax would need to be imposed for almost all types of goods.

There are other forseeable difficulties, as well. However, my goal here is to lay out the basic idea, and to see if it generates any interest.

Reasonableness of the Tax

As proposed above, the jubilee tax would redistribute all wealth over a 49 year period. This time is roughly commensurate with the length of a person's working life or career, at least in most industrialized countries. (In poorer countries, people don't live so long, but fine tuning the interval or rate or both would make the implementation very unwieldy.) In other words, each person would be given, over his or her adult lifetime, his or her fair share of the collective wealth. Such an outcome would appear to be reasonable.

This proposal is not only for the U.S.A. I see no reason it cannot apply equally to other countries, or to the world as a whole.

The Jubilee and Sabbatical Sunsets

I propose re-establishment of the jubilee and sabbatical releases from debts and contracts, as interpreted above. Rather than occurring in specific years, I would see limitations of seven or forty-nine years on each specific contract or obligation. In other words, each debt or contract would not be permitted to extend beyond seven or 49 years. Of course, voluntary extension would be permitted. There would also be a requirement that the time limits not be circumvented by interdependent contracts.

Note that, as explained above, I interpret the seven year limit to apply to involuntary obligations (servitude to pay off a debt, for example) and to all debts, and the forty nine year limit to all contracts and obligations whatsoever. Involuntary servitude includes fines and penalties for crimes.

Theoretically, in the most prevalent thinking, governments rightfully exist only as contracts among the governed. I subscribe to this theory. Accordingly, I would dissolve all governments every 49 years, subject to a renewal by the people themselves. This means a ratification by direct plebiscite or vote, not by representatives.

Laws and institutions established by legitimately and properly elected representatives fall into the category of involuntary obligations, since they do not necessarily reflect the wills of the governed. Therefore, any law passed by a legislative body will, unless ratified by a vote of the people, be of no force and effect after seven years, and may not be renewed or re-established by the same body. Further, to whatever extent reasonable, the implications and effects of laws not ratified are to be reversed. For example, a person punished for an unratified law will be compensated and made whole, since it was not the will of the people to enact the law in the first place. (A prudent legislature might pass most laws so they would be held in abeyance until ratified, to avoid liability for those acts which might not be ratified. Yes, I am suggesting that legislators can be sued for not respecting the will of the people.)

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