- The Washington Times - Sunday, July 28, 2002

On the very day that Congress targeted $200 million in additional funds for Israel, the Israeli Knesset declared a tax war on U.S. immigrants.
Israeli Minister Natan Sharansky led a valiant though ultimately defeated charge against legislation that sorely affects American citizens residing in Israel. Proceeds from personal IRAs or Keoghs will be taxed at 15 percent irrespective of the date of the initial transaction as will interest-bearing accounts. Cumulative taxes as high as 50 percent will be imposed on all U.S.-source income, along with a 15 percent levy on gross U.S. home rental income and an astounding 35 percent on U.S. stock transactions as of Jan. 1, 2004. By stark contrast, profits amassed from Israeli pension funds prior to Jan. 1, 2003 will remain tax free, Israeli rental income will remain virtually untouched and stock transactions within Israel will be taxed at only 15 percent.
According to Israeli certified public accountant Don Shrensky, a single American immigrant with no other source of income will pay an additional $445 per month through 2006, when the burden drops to $111 per month. An elderly couple in their 80s drawing an adjusted gross income of $47,000 from dividends, bonds and funds will lose an extraordinary $1,000 each month, while a young immigrant couple will pay 35 percent more tax on overall income and will be doing so for the next 21-22 years.
This new legislation may go a long way in fulfilling Palestinian leader Yasser Arafat's fantasies, by mortally wounding the pockets of American and Western immigrants and by driving many who live in Israel back to their original shores.
Indeed, some fear that such reforms which will apparently have negligible, if any, revenue advantage are in fact intended to encourage elderly American immigrants to return to the United States and thus to the arms of the U.S. health-care system, in order to relieve future burdens on the Israeli economy.
Crucial economic constraints faced by white-collar Americans must be also considered. Nefesh B'Nefesh, an American organization based in Florida that encourages immigration, is offering cash grants as high as $25,000 per family. Nefesh has calculated what it really costs for an American Jew to immigrate: the Israeli equivalent of a down payment on a midpriced apartment. Nefesh claims there are thousands of applicants on the waiting list, but their grants are of little comfort to those who already paid the hefty price of commitment.
According to the Jewish Agency, American immigrants typically fall into one of three categories: under 30 and starting out in a career; retired and living on pension or Social Security income; or in their early to late 40s, Orthodox, married and with many children.
Myths of the wealthy American Jew to the contrary, the majority face economic hardship or uncertainty in coming "home" to Israel. Middle-class Americans, for example, invest a substantial portion of their savings in their child's university education. A middle-class Israeli, by contrast, pays comparatively little for government-subsidized higher education and is therefore free to invest in a child's future apartment. The Israeli "second" apartment, in turn, becomes the proverbial cash cow, producing rental income for the young adult or his parents.
An Israeli male in his 40s and 50s is also likely to have a reasonable army pension, a pension from a first job and possibly even from a second or third career courtesy of an inexhaustible old boys network that originated in kindergarten, is fortified in the army and which American immigrants of similar age or rank find extremely difficult to penetrate.
Employers also provide free car and gas for high-level positions, and at the very least, an expanding basket of benefits for long-term staffers. This can include clothing, electricity, telephone, travel and education allowances.
Workers at the Israeli Electricity Company get free electricity for life. Many university professors with a solid number of years under their belt are also paid extra monthly stipends if they promise not to moonlight at a competing Israeli university.
The Israeli government, the country's largest single employer, pays plum salaries to senior administrators, from as much as $10,000 monthly in the electricity and water sector to multiples of that at the national bank. Finance Ministry Director-General Ohad Marani describes such public salaries as "unrealistic."
Powerful unions also protect the vast majority of civil service jobs. A colleague told me: "I knew from the moment they first accepted me in my late 20s that there was little chance of ever being be fired and that I would be pushed up the ladder of success." But midcareer American immigrants who haven't risen through the system have little chance of being invited to the party.
"My dream was to work at a particular ministry" an American confided. "They said I had to serve in the army to be considered. Although already in my early 30s, I signed up and completed my service. Then the ministry told me, 'Sorry, you're too old now to be hired.' "
Americans may come from relatively bigger homes and wider lawns, but white-collar Israelis serving in the public and business sectors may, in fact, have longer-term job and financial security.
Yes, the terrorist siege, army service and daily threat of losing a loved one are economically incalculable. These burdens, however, should not be used as justification for creating additional and even fickle economic hardships on people who want to share Israel's challenges, as well as its suffering.

Joyce Starr, former director of Near East Studies at the Center for Strategic and International Studies, is a senior research fellow at a leading Israeli university and lives in Tel Aviv, Israel.


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