The News Behind the News

For followers of the Institute's NBN feature, it should come as no surprise to read in Ha'aretz on May 8, 2000, that one of the government's former senior tax officials, now a very well paid tax lawyer in the private sector, has come out to explain to the Israeli public what the so-called tax reforms really mean.

Gary Agron was recently interviewed by Ha'aretz to give his opinion on the Ben-Bassat tax "reforms." First let us understand the source. Agron is well known to IASPS followers as one of the leaders among the treasury bureaucrats who engaged in every maneuver imaginable to block and kill the legally enacted legislation to bring Free Processing Zones to Israel). Now Agron has followed in the steps of many a senior treasury bureaucrat by moving to the private sector to earn a whopping salary not of course unrelated to the fact that he has connections that might help his clients resulting from his service as deputy income tax commissioner from 1991-1996.

Now, to the substance of Agron's comments. What does Agron have to say about the tax "REFORMS?" Let's hear directly from him:

[1] "He believes that the committee did a fine job, but he still has some reservations."

Commentary: Insofar as his very livelihood is predicated upon his good standing among tax bureaucrats, he could not and would not have said anything but this. And, indeed, as he himself will explain, his reservations are that the "reforms" did not go far enough in imposing more taxes.

[2] "I did not see in the report any attention to all sorts of insurance instruments, such as life insurance and insurance of loss of work ability. If we are talking about a state that wants to be more socialist in a certain manner, then the issue of life and loss of capability insurance should be looked into." (emphasis added)

Commentary: Agron understands quite well the mandate of the Ben-Bassat Committee: a socialist directive to re-distribute income. Agron believes that the tax reforms have not gone far enough in this direction. He advocates a tax (obviously on the bourgeois class) to pay for life insurance and "loss of capability" insurance for the poor. Agron would get along quite well with the First Lady.

[3] "High-tech companies and entrepreneurs have long claimed that the tax system in Israel is pushing them toward transferring companies overseas. Agron addresses this issue and whether the report answered this problem.

"'A capital gains tax of 25 percent is reasonable. I do not like the large gaps between tax on capital and tax on workers' incomes. . . .'"

Commentary: Apparently all of those entrepreneurs who risk everything on a start up, working days and nights, most of whom do not succeed and are often left with more than their share of debts, are not "workers" in Agron's mind, but "exploiters." Apparently, that these entrepreneurs pay taxes on their salaries and company profits is not enough for Agron and the other REFORMERS.

In the article, Agron also waxes on about the need to tax more effectively the grant of shares to company employees and the need for a universal tax filing.

In the end, Agron has said what Prime Minister Barak and Finance Minister Shohat have not been willing to say quite so explicitly: the goal of tax reform is to move more and more toward the goals of socialism: the egalitarian society brought about through massive government re-distribution of income and other property.