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Let's all scream it together: Living in Israel is horrendously expensive. Product prices are going through the roof and the tax burden is back-breaking. The middle class is sinking to its knees under the weight. All together now!

All that is being said far and wide these days. But is it true?

Only in part. It's true that living in Israel is expensive. It's true that product prices are going through the roof, in part because of high indirect tax (VAT, customs and sales tax ). But it's precisely when it comes to tax that we have to finesse: Tax on Israeli citizens and companies (income tax and corporate tax ) is nothing to complain about, for the most part.

The Finance Ministry's State Revenue Administration compared the tax burden of a single person without children earning the average wage (a typical middle-class bachelor ) in Israel and the other OECD countries. The administration found that in 2002, the weight of income tax out of the individual's gross pay was about the same in Israel as the OECD average. Yet today, nine years later, that same bachelor's tax rate is the sixth lowest rate in the OECD.

Much the same happened to the average couple with two children. Their weight of income tax out of gross pay plunged in Israel to the sixth lowest position in the developed world. The only places income tax rates (out of gross pay ) are lower are the Czech Republic, Poland, Mexico and South Korea.

In stark contrast to its image, Israel is in fact a cheap place to live these days, at least when it comes to direct tax (income tax and corporate tax ). This is true at all levels, from the poorest to the wealthiest and for the middle class as well.

The maximum rate of income tax in Israel is 44% of gross pay, roughly the OECD average. But in 2016, the maximum rate is supposed to drop to 39%, which will (at current figures ) put us in the bottom third of income tax rates in the developed world.

When it comes to corporate tax, the picture is even more extreme. The present rate of corporate tax, 25%, places Israel in the bottom third in the developed world. The government plans to cut corporate tax to 18% in 2016, which will put Israel deep inside the bottom 20%.

Yet income tax among lower earners is where things become most extreme.

The threshold where tax starts kicking in is apparently among the highest in the developed world. Roughly speaking, the 50% lowest earners pay no income tax at all.

Income tax starts applying at NIS 4,700 a month for men and NIS 5,555 a month for women.

A woman with two children will pay no income tax at all until her monthly pay passes NIS 8,500 a month, which is higher than the average wage.

A woman with three children pays no income tax at all unless her pay is greater than NIS 9,500 a month, which is way over the average wage.

There is no other country in the world where people earning so much more than the average wage - people firmly in the middle class - don't pay income tax. The upshot is that the upper 50% of earners bear the entire income tax burden.

By the nature of the beast, the heaviest burden is borne by the uppermost: These people pay 75% of all income tax in Israel.

That uppermost 10% also pays 48% of all healthcare and social-security tax.

That skewed picture is balanced, by the way, by the fact that the top 10% of earners take home 41% of total income. In other words, a huge amount of the income, and the tax burden, concentrates on that uppermost 10% of earners.

That's the picture of Israel's inequality pyramid, which gets worse all the time. We have a lot of poor people who earn nothing and pay very little tax (through indirect tax ). We have a middle class that earns middling wages and pays middling tax. And we have a top 10%. And that's our economy in a nutshell.

The price of that narrow pyramid structure is that the tax system has no flexibility.

The tax system already helps the lowest earners as much as it can: Half the people are exempt from income tax. But there's only so much the state can heap on the shoulders of the uppermost decile, which already pays 75% of all income tax. Therefore, it may sound socially just to raise tax for the richest, but this wouldn't reap the state much more because they're such a thin layer.

And the pyramid is so narrow that the uppermost 10% is reached at pretty low pay levels. According to the State Revenue Administration, 44% of Israelis earn between zero and NIS 5,000 a month, gross. Another 24% earn from NIS 5,000 to NIS 8,500.

In other words, 66% of Israelis, that's two-thirds, are earning less than the average wage.

Another 16% earn from NIS 8,500 to NIS 14,500 a month, 8% earn from NIS 14,000 to NIS 21,000 and 6% earn from NIS 21,000 to NIS 40,000. The top 2% earn more than NIS 40,000 a month, gross.

A rough calculation finds that the top decile starts at about NIS 18,000 to NIS 20,000 a month. So if you earn that much, you may feel that it's not much, but in fact you're already in that coveted place, the uppermost 10%.

Just the facts

* Income tax starts applying at NIS 4,700 a month for men and NIS 5,555 a month for women

* A woman with three children pays no income tax at all unless her pay is greater than NIS 9,500 a month

* The 10% of people who earn the most also pay 75% of all income tax in Israel and 48% of all healthcare tax

* Some 66% of Israelis earn less than the average wage; 3.3% gross more than NIS 40,000 a month