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The purpose of this study is to explain the effect of a tax-free regime of socioeconomics in the social well-being function. This paper carries on the message that has been recognized in the economic theory and by many for a long time now. This is that the incidence of all forms of taxes – direct and indirect taxes – proves to cause inequitable distribution of wealth. The rich still comprises the top 1 per cent of the income earners despite the existence of heavy tax burden. This paper goes beyond this observation and its explanation to make the case that the tax regime also causes distortionary effects in the generalized system of social and economic relations.

In the midst of the generalized system of simulating the well-being function, subject to what is called the circular causation system of the endogenous variables is explained by the critical parameter of the epistemic nature in the unity of knowledge by complementarities between the variables signifying the good choices.

This paper also contrarily establishes and explains the nature of equitable production and distribution of income in society at large. The tax-free regime is explained to generate and sustain balanced inter-causality between the critical variables in the generalized system of equations for simulating the well-being function. Some of the special properties of the evolutionary learning kind of the well-being simulation problem in the tax-free regime are brought out.

Empirical work could follow.

Of special interest are the Arab Middle Eastern countries, most of which do not levy tax on households; with a small rate on businesses.

This paper goes beyond this observation and its explanation to make the case that the tax regime also causes distortionary effects in the generalized system of social and economic relations. Most importantly, the presence of tax regime disturbs the balanced forms of inter-causality between the critical variables of the social and economic type. The social well-being is thus eroded in the midst of a tax regime.

This paper is a rare one of its kind to bring out the question surrounding the tax-free regimes usually practiced in Islamic fiscal theory and today adopted by many Muslim countries in the Middle East.

The purpose of this paper is to lay down the methodological structure of the epistemology of tawhid (Oneness of Allah). In this paper, the meaning of tawhid also refers to the monotheistic unity of knowledge (consilience) in the cast of its organic pairing by circular causation relations between the moral and material possibilities. The paper thereby raises the critique of mainstream economic reasoning and its imitation by existing Islamic economics. Consequently, by the ontological, epistemological and phenomenological foundation of tawhidi methodological worldview, an altogether new socio-scientific reasoning in generality and economic reasoning in particular is introduced.

The socio-scientific methodological reasoning of unity of knowledge according to the tawhidi methodological worldview is introduced contrary to the inept rational choice postulates of mainstream economic reasoning and its imitation by existing notions of Islamic economics. The method of instructing students in the light of this approach according to Tawhidi Islamic Economics (TIE) is introduced from the existing literature.

The existing nature of mainstream economics and its imitation by Islamic economics is critically deconstructed and replaced by the true epistemological, ontological and phenomenological perspectives of TIE in the world of learning. Some inner properties of such a methodological study of TIE are laid bare for further investigation.

This is the first paper of its kind in this journal to expound the original and most creative methodological worldview that Islamic economics must bear. This is the foundation of the development of the true stance of Islamic economics and finance.

Choudhury claims to have developed a distinct methodology based on specific Islamic principles. This methodology, if adopted, will transform the worldview of socioeconomic inquiry, alter the assumptions of economic theory, and transform policy recommendations and implications. The Islamic principle at the center of this methodology is the concept of Tawhid (unity of God). In addition to defining it properly, he is correct to use the concept as the starting block for a distinctive Islamic methodology, as it represents the foundation of Islamic doctrine. In other words, any purported Islamic methodology that does not encompass within its foundation the concept of Tawhid will hardly qualify to be characterized as Islamic. The critical question then is how to apply the concept in the context of socio-scientific inquiry.

Pure economic theory ignores ethical values but in Islamic society these are seen as essentially recreated entities of the social order. Islam presents its worldview not as a pluralistic value but as one that calls for the organisation of social and economic order around its well‐defined precepts, principles and instruments. The relationships between these are explained both philosophically and logically. Islamic social choice formation using syllogistic deductionism is demonstrated.

The generality of the universe is “everything.” In this regard, the Qur'an declares abundantly on the ultimate and perfect domain of the divine law in creation. This also means the profundity of the divine law in explaining and applying to all things in the knowledge–time–space dimensions of the conscious universe. Such observations or insights that span the complete universe comprise the Signs of Allah (ayath Allah).¹

Davos World Economic Forum (2008a–d) sparked off a number of critical points on global economic remodeling. They bring forth social and economic facts that are to be addressed in a framework quite different from the conventional policy-theoretic reasoning of age-old socioeconomics. The prevalent reasoning continues on the traditional paradigm of growth and sharing, but in an unequal world of power, politics, and self-interest. In the present status quo, resources do not flow between the top and bottom, the industrialized and the developing countries, the rich and the poor, except by means of handouts and relief (Hans Singer and Ansari, 1988).

With a population of over 150¹ million, Bangladesh provides a large consumer market for potential industries. Moreover, it holds one of the lowest wage structures in the world. The comparative advantage of Bangladesh lies primarily in its agro-processing industries. But besides agriculture, the rural-based microenterprise (MEs) sector in Bangladesh is a potentially lucrative field of investment (IPPF, 2001). In spite of its major contributions toward economic development, the rural-based microentrepreneurs in Bangladesh suffer from lack in working capital, institutional credit facilities, and poor management. There are many formal and informal financing organizations that are functioning in the money market of Bangladesh. Formal financing institutions like government and privately owned commercial banks normally give loans to large- and medium-scale industries (Alam, 2009). Cooperative banks in the country, although giving loans to the rural-based microenterprises, confine their credit giving activities mainly to the members of the bank (BIDS, 1981, 1988, 1989, 1990). One of the specialized and well-known microcredit giving organizations in Bangladesh called “Grameen Bank” (Yunus, 1993; Nabi, 1990) also gives microcredit to the rural-based microentrepreneurs, especially to the rural poor women. Besides many NGOs, moneylenders in rural Bangladesh are also an important source of lending funds to the rural-based microentrepreneurs.