MK proposes bill to stop double taxation of American Israelis

“For many Americans, this can be the tipping point for making the decision on making aliyah.”

By Batya Jerenberg, World Israel News

MK Simcha Rothman (Religious Zionism) is proposing a bill Sunday to eliminate double taxation for American Israelis, in a move he hopes will encourage immigration (aliyah) from the USA.

Currently, dual citizens pay Israeli social security (Bituach Leumi) on income earned in the United States, and if they work as independent freelancers they also pay a percentage of their income to American social security.

“Even worse,” the legislator wrote in explaining the problem in a Facebook post Friday, “those payments are not deductible, so you will pay income tax on the money you paid to social security.”

Rothman said he has worked on a way to stop the financial hit with Bituach Leumi’s management, and “in a last effort to get something good from the 24th Knesset, my bill to eliminate those double payments will be on the Ministerial Committee on Legislation’s agenda” Sunday.

It is among over three dozen bills being pushed by various MKs before the Knesset votes to disband this week. The rush is due to the fact that the committee must pass them so that they can go to their first reading in the plenum on Monday, before that happens.

If it fails – or gets passed over – in the committee, the bill cannot go to the floor and the process will have to begin all over again. If it passes its first reading, however, the bill can go to the next step of being refined in committee after the next Knesset is formed and then go for its second and third readings to become law.

The importance of the bill is clear to Rothman, who also got members from the opposition to sign onto it.

“For many Americans this can be the tipping point for making the decision on making Aliya,” he wrote.

In addition, “for many new Olim this can bring the opportunity to start a new business.”

Roughly 155,000 Americans have made Aliyah since the establishment of the state, according to Jewish Agency data. Last year marked the largest contingent since 1973, when 4,000 chose to make Israel their home.

However, the number of Israelis with American citizenship is much larger, because parents of children born to Americans abroad (not just Israel), usually get citizenship for them, along with social security numbers. When these children join the workforce, they have to report their income to the IRS just as their parents do, and get taxed the same as well.

Rabbi Dov Lipman, founder of Yad L’Olim, which helps new immigrants and their families, told World Israel News that his NGO is “very much supports this legislation,” since in their “travels around Israel this issue did come up quite a bit.”

“We applaud MK Rothman and the vast coalition he established for trying to move forward with the law,” said, a former Knesset member.

Lipman said the idea for the law had been in the works already “for about a year.”

“It’s a long process to get laws to the point where they’re brought to the Ministerial Committee,” he acknowledged.

Lipman conceded that the bill “could get caught up in the internal politics” related to the elections.

“I don’t know if it will pass or not,” Lipman admitted. “We also have to remember that there are budgetary concerns and issues in terms of the relationship with the United States. It’s more complicated than it simply looks on the surface.”