The Israeli elections and it's tax implications on US citizens living in Israel: Yes, there may be some real changes due to this election.
Now that the results are mostly in, with the right back in power, let's hope the politicians make good on their promises:
Back in June, Knesset member Simcha Rothman introduced a novel bill. It would exempt American citizens living in Israel who have already paid Social Security taxes to the US from paying a similar tax to the Israeli Social Security System (Bituach Leumi). He promised that if the Right would come back in power, he would push the law through.
This is a great workaround to the unreasonable US-Israeli tax treaty which does not provide any "Totalization" agreement to help US citizens who are Israeli residents avoid double social security taxation. Currently, self-employed US citizens in Israel must pay double Social Security tax, both to the US and Israel, causing a great difficulty to be self employed at all.
So while the US has not made any moves to change the treaty, the new bill proposes to actually have the Israeli government waive it's right to collect this tax from those residents.
Quite a novel idea, for the country of residence to waive the tax. This is in line with Simcha Rothman's Religious Zionist Party's ideals to encourage Aliyah (Jewish immigration to Israel), especially from the USA. He mentioned that this quandary actually causes some people to avoid moving to Israel.
Hopefully this new law will eventually be passed, making the lives of US citizens in Israel much easier.
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