89% of Israel’s ‘mega-rich’ are men, says Treasury

Mega-rich Israelis tend to pay about NIS 10.2m. in direct taxes every year, or about 400 times the national average, according to the survey.

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April 2, 2017 23:02
2 minute read.
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money. (photo credit: REUTERS)

 
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Of Israel’s 400 wealthiest citizens – dubbed by the Finance Ministry as the country’s “mega-rich” – 89% are men.

The average member of the country’s exclusive mega-rich club is a 56-year-old male Tel Aviv resident, with an annual income of NIS 36.9 million, according to a survey published by the ministry’s chief economist. Not only are just 11% of the 400 mega-rich female, but the men on the list also earn about 12% more than the women, the report found.

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On an individual level, the mega-rich tend to earn 290 times more than the typical Israeli – whose average annual income is about NIS 127,000, the survey found. The minimum annual income among Israel’s 400 wealthiest citizens was NIS 10.5m.

All in all, the combined earnings of the 400 wealthiest Israelis constitute 2.9% of the total taxable income in Israel, the survey said. Looking at just the 10 richest people on the list, the chief economist found that their combined income makes up 0.6% of the country’s total taxable income, with each person earning NIS 320m. on average.

While personal income – salaries, business revenues and pensions – make up 93.2% of the average taxpayer’s earnings, such income makes up only 8.2% of the mega-rich Israeli’s earnings, the report said. The remaining 91.8% is comprised of “passive income,” such as dividends, capital gains and interest.

Mega-rich Israelis tend to pay about NIS 10.2m. in direct taxes every year, or about 400 times the national average, according to the survey. Collectively, they are responsible for about 4% of all direct taxes imposed on individuals.

“As expected from a progressive income tax, the rate of income tax paid by the megarich is higher than the average rate in the general population,” the report said. “However, the mega-rich pay relatively fewer taxes than the ‘regular’ rich that belong to the upper percentile.”



The term “upper percentile” refers to a group of about 40,000 Israelis with an average annual income of NIS 1.6m., who account for about 30% of the income tax collected in the country, according to the chief economist.

The gap in income tax rates among the more exclusive mega-rich and larger group of upper percentile Israelis stems from the fact that most of the income of the mega-rich is derived from capital earnings that are subject to a limited tax rate, according to the study.

The wealth of the rest of the upper percentile, on the other hand, includes much more personal income – which is subject to a progressive tax rate.

While honing in on Israel’s mega-rich, the chief economist also took a look at the 400 richest Americans, for the sake of comparison.

The minimum income for entrance into the Israeli mega-rich club was NIS 10.5m., 46 times lower than the US minimum of NIS 482m., the study found. The average income of the American mega-rich individual was NIS 1.2 billion, 33 times more than that of their Israeli counterparts.

“These gaps, whether minimal or average, are partly the result of an optical illusion,” the report said, stressing the extreme population differences between the two countries.

“With regard to population, 400 people in the US are 10 people in Israel. For the 10 richest people in Israel, the average income is NIS 320m. This income is lower than that of their American counterparts, but by 1 to 3.8 only.”

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