Yoav Fisher
Father, Economist

The Big Economic Lie of the Judicial ‘Reform’

My biggest concern about this “Reform” is that too many Israelis don’t realize what is going on below the surface, and one major factor is the horrific ramifications of the recent budget.

Last week Yisrael Eichler, a Knesset Member from United Torah Judaism (who believes non-Orthodox Jews are “mentally ill”) stated publicly that Ultra-Orthodox Jews in Israel “finance non-orthodox Jews“.

This is a lie.

It is a well-documented fact that the Ultra Orthodox population in Israel pays significantly less tax than non-Ultra Orthodox Israelis.

But what is less discussed is that the Center and Left parties (currently the opposition parties in Knesset) contribute more to taxes than the current right wing, ultra-religious, and ultra-nationalist parties in the Knesset majority coalition (Likud, Shas, the Religious Zionist Party, and United Torah Judaism).

Actually, we should rephrase that, because the wording is critical… The right-wing parties currently running the Israeli Knesset are entirely dependent on the Center and Left parties in the opposition.

The basis for this statement begins with the Israeli National Insurance (Bituach Leumi), which is the governmental agency in charge of social welfare for all Israeli citizens. All Israeli citizens contribute to Bituach Leumi through income taxes.

As a public record, Bituach Leumi publishes the average income per person of every community in Israel with over 1000 people. Income taxes in Israel are collected according to defined income tax brackets — similar to most countries where those with higher income contribute more income taxes.

This allows us to see how much income tax the average Israeli citizen contributes to the national tax base per community.

In order the understand the political implications of this, we can look at the results of the last election, which are published at the city/community level as well.

Together we get a rough estimate of the average annual income tax per person in Israel according to which political party they voted for.

According to the data, the right-wing coalition parties of the Knesset contributed about 63 billion shekels in income tax in 2022. The remaining opposition parties contributed about 5% more — just over 66 billion shekels.

But the opposition parties in the Knesset received 15% less votes — 1,653,451 as opposed to 1,936,916 for the right-wing coalition parties. This means that on average, someone who voted for the opposition parties contributed around 40,000 shekels in income taxes in 2022, as opposed to 32,500 shekels for someone who voted for one of the parties in the right wing coalition — 23% more.

This becomes even more extreme when separated out by the parties currently in the Knesset:

(I threw a bone to Meretz – current coalition parties in red.)

Using publicly available data we can see that on average, someone who voted for the Labor Party contributed more than twice as much income tax to the country than someone who voted for Shas.

All of the voters for the Meretz party — who did not even get in to the current government because they did not get enough votes to reach the minimum threshold — contributed more total income tax to the government than the entire party of United Torah Judaism, even though UTJ received more than twice as many votes.

And yes, clearly this is pop-statistics and not some peer-reviewed academic paper, but it does reflect reality.

Except the reality is much, much, much worse.

What we see here does not include things like municipal taxes, corporate taxes, or capital gains tax. When you include these aspects, the lopsided nature of financial contribution in Israel becomes dire. At least 80% of the total tax revenue in Israel comes from 20% of the population, and possibly at least 90% according to some researchers.

It is not hard to guess who these people are.

But that is only half the story. The other half asks the question — where does the money go?

Bituach Leumi publishes data on the amount of people who receive every type of welfare stipend also at the community level. This information can also be cross-referenced with the voting data to get a general picture of where the tax revenue from income tax flows by political party:

For every type of allowance offered by the Israeli National Insurance, there are more right-wing recipients than Center or Left recipients, and this includes the two Arab parties currently in the Knesset.

Of all the different types of stipends, the largest is Child Allowance. There are more recipients of Child Allowance subsidies than every other type of subsidy combined. There are nearly 3.1M instances of Child Allowance subsidies in Israel. The next largest, Senior Citizens, number one million.

Because of sheer numbers, the bulk of Bituach Leumi is allocated to child support in Israel, and therefore it is important to hone in on this specific subsidy.

The biggest gap between percent of total votes and percent of total child subsidy goes to Shas, United Torah Judaism, the Religious Zionist Party, and the two Arab parties.

There are those in Israel who may look at this point and argue that the Jewish parties subsidize the Arab parties, but they would be ignoring the fact that the two Arab parties are significantly smaller than all of the other parties. Shas alone received more votes than both of the Arab parties combined.

And here is where we come back to the concept of “dependency” that we started with, and the big fat Lie that is underlying the “Reform”  and this budget.

At the end of the day, constituents for Shas, United Torah Judaism, and the Religious Zionist parties are completely dependent on constituents from Center or Left parties for their wellbeing. The money that supports every yeshiva in Israel, that allows Ultra-Orthodox families to buy food, that ensures healthcare and adequate education, and even the Israel Defense Force, all can be traced to someone from a Center or Left party who woke up that morning and went to work.

The unspoken hypocrisy and deceit of the leaders of the right wing parties in the Knesset is that they are promising a future to their constituents that is impossible without the continued financial support of the center and left parties they so despise.

If the politicians behind the current right wing coalition parties really cared for the future of the country, they would allocate funding to the areas that can continue to contribute to the future of the country. If the right wing coalition members actually cared about the future of their constituents they would not strip billions of shekels from sectors of the economy that actually contribute to future economic growth – like education.

Sadly, they are doing the exact opposite, and effectively they are destroying the future of their own constituents for the sake of short term political pandering. They are shooting their own constituents in the foot.

If the trend from this current budget continues, in a very short amount of time there will be no financial support for Israelis on the right-wing, let alone for Israelis in the Center or Left.

About the Author
Yoav Fisher lives and works in Israel.
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