20% of Israelis Pay 80% of Taxes

Those Israelis whose income places them in Israel's top 20th percentile pay 80% of the taxes that are levied in Israel, according to the yearly report published by the Finance Ministry's State Income Authority Sunday.

In addition, the salary of almost half (47%) of salaried workers in Israel is not high enough to be subject to income tax.

In 2006, the collection of taxes rose by a real rate of 11%....

The direct tax reforms have put more weight on the taxes that are paid by those wage earners that are in the top 20th percentile of the Israel economy. In 2002, before the reforms, the top 20% paid 76% of direct taxes compared with 80% in 2006.

This is an Achilles' Heel of democracies. The majority can vote to confiscate the wealth of the wealthier minority. In a small country like Israel, the productive minority can then respond by shielding their wealth through paying off government and legal "fixers" or by staying out completely, which then impoverishes the nation. It is no accident that the typical growth path of the vaunted Israeli hi-tech startup is to move to Delaware as soon as they are able. Delaware is the U.S. state that has the lowest burden of taxes and regulations.

In this area, morality means restraint from the impulse to take one's neighbor's money by force of government, which leads to the wealth of a nation.

Ironically, Netanyahu lowered tax rates, which the Left decried as a cruel shift of the tax burden to the poor. Instead, it resulted in a huge increase in tax revenues, particularly from the wealthy.