When a long-debated tax reform goes into effect in Israel on
Jan. 1, some immigrants will have much higher tax bills.
Many immigrants, especially those retiring to Israel, came
with the understanding that they would not have to pay
Israeli taxes on income from their overseas assets. American
immigrants generally pay U.S. taxes on that money.
The new tax law makes radical changes in the way immigrants'
overseas assets are treated, including passive income,
pensions and income earned abroad.
American immigrants, many of whom are retired and living on
fixed pensions from America, will now have to pay taxes both
in Israel and abroad.
According to the Tax Reform Action Committee, an ad-hoc group
of concerned immigrants, the tax implications will vary for
immigrants from different countries.
A retired American couple with $36,000 overseas dividend
income who pay $3,124 income taxes in the United States,
under the new law will have to pay an additional $9,476 in
Israel.
The government recently decided to raise the immigration
benefits offered to North American immigrants to match those
offered to olim from distressed areas. In addition to
an $8,000 grant, immigrants receive free one- way tickets to
Israel, rent subsidies or cheaper mortgage rates for five
years, customs rights on imported goods for three years and
free health insurance and Hebrew study for six months.
The tax reform passed as a law in early 2002, meaning that
the only way to change it is through amendments in the
Knesset. The Knesset will be out of session until after the
Jan. 28 elections, and the new law is scheduled to go into
effect Jan. 1.
The Jewish Agency for Israel's Board of Governors unanimously
passed a resolution calling on Sharon to abolish the "anti-
aliyah" taxes.
