Prospective state revenue from an estate tax proposed by Minister of Finance-designate Moshe Kahlon is estimated at NIS 1-1.5 billion, according to preliminary calculations by the Ministry of Finance and the Israel Tax Authority.
The estimate is based on the revenues from estate tax in Organization for Economic Cooperation and Development (OECD) countries, assuming that a 10-15% tax rate is imposed on estates worth NIS 10 million or more.
Former Ministry of Finance director general and College of Management Prof. Avi Ben-Bassat believes that these estimates are too low, and that an estate tax similar to the one proposed in 2000 by a committee he headed would generate at least NIS 2.5 billion in revenue.
In a talk with "Globes," Ben-Bassat stated, "Inheritance is the biggest source of inequality, and taxing it in Israel is very much called for, given the fact that Israel is in fifth place in the developed world in inequality."
Netanyahu and Trajtenberg against, Buffett in favor
"it just makes sense that those of us who’ve benefited most from the market should pay a bigger share... When you get rid of the estate tax, you’re basically handing over command of the country’s resources to people who didn’t earn it," Warren Buffett, the second richest man in the US, is reputed to have told President Barack Obama. Buffet is among the 120 signers of a petition published on February 11, 2001 in "The New York Times."
The signers, who include many other billionaires, such as George Soros, opposed estate tax changes initiated by then-President George Bush, who sought to completely eliminate the tax within a decade. The Republican Party, especially its Tea Party faction, strongly opposed the tax in the US.
Prime Minister Benjamin Netanyahu is considered an opponent of the estate tax, but its opponents include economists not identified with Likud, such as MK Manuel Trajtenberg (Zionist Union).
The estate tax generates $30 billion annually in the US, amounting to only 0.1% of GDP. The main reason is the large number of exemptions and the high $5.4 million threshold. The exemptions also serve an important function, however - the estate tax exemption granted for donations encourages wealthy people in the US to donate a large proportion of their wealth, instead of leaving it to their children.
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2015
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