Decrease the compound tax rate to 30%. Abrogate all taxes in favor of sales tax to make taxation transparent. Only consumption must be taxable, not personal or corporate income. Customs duties equal sales tax.
Or, ideally, levy only per-capita tax. People enjoy government services approximately equally: the rich do not enjoy more defense than the poor. The Israeli budget amounts to $500 per person per month if no other taxes or customs duties are levied. Though a radical measure, per capita tax would attract corporate business—which will be tax-free—and greatly increase economic output. Purchasing power will skyrocket as tax-free prices fall. A per capita tax will force haredim to work and will make the country too expensive for most Arabs.
Taxation and municipal payments are universally enforced among citizens regardless of their religion. Arab villages and haredi communities must not be immune from tax auditors.
Children are responsible for their parents. The state taxes one-tenth of childrens’ income (or the sales tax equivalent) as a pension for their parents. Their parents’ income is taxed for their grandparents’ pension. Parents will thus have a vested interest in bringing up more children, giving them better educations, and inducing them to stay in Israel. Instead of keeping money on their pension accounts, which are susceptible to inflation and stock-market gambling, parents will invest in their children as a sure way to provide for their own pension.
State welfare is only due to those who are physically or mentally incapable of doing any job rather than their choice job. After providing welfare funds, state can obtain redress from the beneficiary’s assets, including his apartment, and from his children and grandchildren’s income. State welfare is limited to emergency healthcare, basic foodstuffs, and hostel-type accommodation.
Parents are responsible for their children. Any state subsidies to the children, including medical insurance, are deducted from their parents’ income. If their income is below a certain minimum, the state’s claim remains in force indefinitely; interest accrues.
All schools are private. The state sets the minimal education standards, which are sensitive to religious beliefs. The state provides interest-free long-term loans for school and university education. The loans are provided automatically, and are not dependent on income qualifications. It is especially important to do away with nearly-free university education, which prompts students to take economically irrational studies in liberal courses. Everyone must be able to get an education, but he must also act responsibly in choosing an education that will eventually pay for itself. Private schools and universities may cut down on the excessive number of irrelevant courses.
The minimum wage is abrogated. Currently, minimum wage is the largest tax paid by consumers—a tax of which they are not even aware. If the state wants to subsidize low-wage earners, it must do so transparently, through subsidies. Incidentally, the minimum wage disproportionally benefits Israeli Arab citizens.
Labor immigration is structured to the benefit of citizens. Foreign laborers are not entitled to a minimum wage; they are free to leave the country if they do not like the wages offered them. Since their low wages set their low standard of living, they must not live in our cities, but in dodge towns. Otherwise, the foreigners will use leisure infrastructure (parks, etc) built with citizens’ taxes. An immigrant visa allows them to work profitably in our country, and implies no further obligations on the part of the state. The foreigners are not subject to social security taxes, though they must purchase health insurance. Insurance companies need not offer foreigners the same terms as citizens; generally, health insurance for foreigners covers only emergency treatment. Foreign laborers are only allowed to come here for up to five years, with no possibility of reentry; there must be no possibility of emotional attachment. Bearing children constitutes a breach of the immigration contract and leads to immediate deportation. In deportation matters, foreigners do not enjoy the due process intended for citizens, but only an administrative hearing. The foreigners deposit 20% of their wages in local banks to serve as a security for their legal obedience; failure to leave by the date of the visa’s expiration allows the state to forfeit that surety. Hiring illegal aliens is a punishable crime.
Freedom of hire. No one can tell an employer whether he should hire minorities or invalids. Arab employers must be free to refuse employment or service to Jews, and vice versa.
All licensing and permits are abrogated. Companies who wish to certify the quality or safety of their products are free to use private certification services and advertise accordingly. Professionals who want to establish their reputations can join self-regulating associations. In the areas of public safety, such as construction or medicine, government can mandate that companies carry liability insurance. In turn, insurance companies will ensure compliance with safety standards.
Offshore jurisdiction: companies registered in Israel but doing business exclusively offshore are still liable to full Israeli taxation, but they cannot be audited as long as they do no business in Israel. In this way, Israel won’t be ostracized internationally as an offshore jurisdiction, and her companies won’t be penalized internationally as tax-haven enterprises, but will be free to report any amount of income they want.
Money laundering: Israel will continue to subscribe to FATF regulation, but will establish a due process for money laundering trials with such stringent standards of proof as to make it almost impossible for anyone to be convicted of money laundering, ensuring that no accounts can be seized. The accounts cannot be frozen during investigation and trial, so that their owners can always transfer their money out of the suspect accounts. Israel won’t suffer penalties as a money-laundering jurisdiction, yet will enjoy significant foreign investments and commissions from operations with dirty money.
Municipal subsidies are abrogated. Towns and villages will spend only as much as they can extract in taxes. Productive towns will become more attractive and more expensive, while the haredi districts and Arab towns will become as rundown as their residents’ tax returns justify.
Municipalities are reorganized so as to cover areas with similar tax income. There must be no municipalities with mixed economic neighborhoods, such as north and south Tel Aviv, or Jewish and Arab Lod. Such mixed municipalities practically tax more affluent citizens for redistribution to pauper neighborhoods.
Conscription is reduced to six months, and only for men—but for all men. The army does not need a significant number of women. GDP losses from conscripting youth at its most productive age are staggering. Military professions which require education will become paid jobs. The public will know just how much the army costs. The government pays for military casualties at life insurance rates—$5 million per person. Humane wars and urban combat without fire support must become prohibitively expensive to wage.
Judges are appointed through direct elections at all levels. Population must vote not only for local judges, but for the Supreme Court, as well. That’s the way to curb judicial activism.