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January 24, 2016 7:17 am

Double Taxation and Antisemitism

avatar by Ruthie Blum

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The US and Israel flags. Ruthie Blum says "in spite of all the talk one hears and reads about relinquishing U.S. citizenship, I have yet to meet a single [American Israeli] person who has actually gone through with it -- other than American-born Israelis appointed to ambassadorial positions." Photo: American Freedom Party.

The US and Israel flags. Ruthie Blum says “in spite of all the talk one hears and reads about relinquishing U.S. citizenship, I have yet to meet a single [American Israeli] person who has actually gone through with it — other than American-born Israelis appointed to ambassadorial positions.” Photo: American Freedom Party.

Like a growing number of American expats living in Israel, I have spent the last few years contemplating renouncing my US citizenship.

Contrary to popular belief among those familiar with my concern about where the country of my birth is headed, the dilemma with which I have been grappling has nothing to do with the fact that President Barack Obama was the people’s choice not only once, but twice.

No, I do not hold the view that if your candidate or party loses an election, the best response is to turn on your country. Nor did my leaving the shores nearly four decades ago of what used to be legitimately called the “land of the free and home of the brave” constitute emigration. It was, rather, an act of immigration — to my Jewish homeland. Possessing two passports never seemed problematic. The only disadvantage to it would turn out to be a financial one.

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Initially, when all US citizens residing abroad were informed in around the late 1980s that we had to file tax returns, even this was less of problem than a nuisance for American Israelis like me, who came to the Jewish state with no money, and proceeded to earn even less. This meant that the only real expense involved was the fee to an accountant who understood how to fill out the incomprehensible forms. It was a small price, literally and figuratively, to have to pay for the privilege of casting an absentee ballot in US elections and of being able to sail through the citizens’ line when arriving at an American airport after a 12-hour flight. The other advantage was not having to obtain a visa to enter the United States, which Israelis are forced to do.

My troubles began when I became self-employed and discovered that I would have to start paying a hefty percentage of my income — after half of it was already eaten by Israeli taxes — to the IRS for Social Security. The next blow arrived with a new directive that all banks in Israel and the rest of the world must report to the US government on the accounts held by American citizens, even those like myself, who have zero assets and live hand-to-mouth, praying to make it to the end of the month without an overdraft.

Other American-Israelis, the ones with stock portfolios and inheritances, have had it worse. Though there is no double taxation, there are also no double exemptions. This means that if one government doesn’t take a bite out of your holdings, the other one swoops in for the kill. This is only one of many reasons for the famous joke about aliyah from Western countries: How do you make a small fortune in Israel? Arrive with a large one.

But here’s the rub. In spite of all the talk one hears and reads about relinquishing US citizenship, I have yet to meet a single person who has actually gone through with it — other than American-born Israelis appointed to ambassadorial positions. And even those professed it was with a heavy heart that they signed away that part of their identity.

This week, after receiving an article in my inbox about why so many American Israelis are seriously weighing this option, I asked the accountant who handles my US taxes if she has been witnessing a trend in this direction. She replied that so far the only pattern she has seen is that everyone has been threatening to do it, but almost nobody is following through.

“It’s the galut [exile] mentality,” she said. “Throughout history, Jews have always valued an escape route for self-preservation.” Indeed, that other passport is like a security blanket for worst-case scenarios. We feel in our bones that if another Hitler were to come along, we would have a place to run to — one that cannot turn us away from the citizens’ line.”

The irony is astounding. It was for this that the Jewish state was established in the first place. Our people will never again have to flee and be at the mercy of other governments deciding whether to take us in. We’re home, and we’re covered militarily, spiritually, societally and psychologically. Yet we still hang on to that crumb of bread under our pillow — that little booklet to flash at a foreign port of entry — just in case.

Meanwhile, no matter how many terrorist attacks we endure, it is actually the rest of the world that has cause to live in fear today. Though Jews are by no means the sole victims of the global jihadi onslaught, we are certainly key targets. This is especially true now, with the gleeful addition to the mix of old-style antisemitism and its newer, far-left incarnation, which uses the excuse of Israeli policy to launch an all-out frontal assault on Jews and the Jewish state.

Though the situation in the United States is nowhere as bad as that of Europe, even Americans are getting a taste of what it’s like to be hated simply for who you are, no matter what you do to prove your good intentions. Ask any Jew on a US campus, or Israeli visitor, who is treated to daily verbal abuse even if he toes the anti-Israel line.

In Europe, wearing a kippah or other outward Jewish accoutrements is posing enough of a danger that the issue of whether to err on the side of caution has become the subject of public debate. When Prime Minister Benjamin Netanyahu went to France last year following the Charlie Hebdo and Hyper Cacher massacres and announced that all Jews are welcome to come to Israel, he was both ridiculed for “elbowing” his way to the front line in the solidarity march and chastised for attempting to offer French citizens refuge during a memorial event.

Many of those Jews have taken him up on his offer, however. Others are flocking to Britain and elsewhere to escape their plight. Even Russian President Vladimir Putin recently assured Europe’s Jews they would be safe in his country.

It is thus puzzling that those of us who long ago made the decision to move to and remain in Israel for life should be hesitant to cancel our bureaucratic affiliation with the country we left. What it must mean is that even after having concrete proof that flight is no longer necessary, we Jews have difficulty believing it to be true. Tragically, it’s no wonder.

Ruthie Blum is the web editor of The Algemeiner (algemeiner.com). This article was originally published by Israel Hayom.

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  • AJ Burns

    There is a lot unsaid in that the fact that “there are also no double exemptions”. From the perspective a dual citizen living in the USA I am supposed to pay US taxes on the earnings from my keren hishtalmoot (education account-like a roth ira) and keren pensia (retirement account-like an ira) to the USA even when I dont/cant touch them. The calculations for these foreign money markets- if done properly -are capital gains that you are supposed to pay to the US each year. Nobody probably does but I do because I was audited and crucified by the irs. We cant touch Israeli pension until age 72 but are supposed to pay the USA taxes on the annual earnings on these pensions each year because there is no pension account treaty. With FATCA it will become more of a reality to Americans living in Israel and maybe more will decide to finally cut the chord.

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