Yachimovich, Ignoring the Facts

"Ceded ground won't be regained," Shelly Yachimovich warned the hi-tech community yesterday, urging them to rebel.

The reference was to the company cars they drive, on which the treasury means to raise the tax they pay.

When a worker is allocated a company car, his salary for tax purposes is raised by the value of using the car. The treasury argues that the value is much too low, and that basically, these people - generally upper middle class - are getting an unequitable tax break.

Yachimovich was, therefore, urging the techies to rebel against the treasury's intention to raise their tax burden.

Nobody can take away Yachimovich's energy and eloquence. But neither can you take away her inability to stick to the facts, all of the facts, and the same applies to everybody else calling to preserve that tax benefit.

The facts are boring, to tell the truth. One is that this company car perk is the province of higher-ranking, better-paid workers. The treasury says that almost half, 46% to be precise, of the tax benefit goes to the uppermost decile.

In other words, NIS 1.15 billion in tax benefits are exploited by the top 10% of workers, who are far more likely to get company cars than anybody else is.

The treasury wants to use the money it gains in adding tax on company cars, to lowering income tax for the middle class. Therefore, the ones to benefit most from the reform will be the middle class. Treasury figures claim that 92% to 94% of the fifth and sixth decile will benefit.

Not ceded. Conquered

So, Yachimovich's "ceded ground" is not exactly ceded. It is ground seized by the 10% richest, from the middle deciles.

As happens in conquests, it's nice to be on the side of the conqueror, and convenient to ignore the price paid by the conquered. In recent years the tax benefit on company cars has risen to NIS 2.5 billion a year. Over a decade, the entire population has paid NIS 20 billion in tax to cover this perk so the strongest workers in Israel can continue to drive their company cars.

Yachimovich's "ceded ground" is equivalent to the state declaring a tax hike, applicable to everybody grossing from NIS 6,000 to NIS 12,000 a month, in order lower tax for the people earning NIS 20,000 or more a month.

We may assume that if the treasury did any such thing, Yachimovich - a champion of the "welfare state" - would be appalled. Yet she leads the populist lobby to protect the workers' right to a company car, at the expense of everybody else.

The problem with Yachimovich's claim is that she's ignoring the other side of the equation, the inconvenient side that shows the price. It's a zero-sum game. If the state forgives tax somewhere, it is at the expense of something else.

When the state supports people who can't take care of themselves, nobody objects. If the state supports the 10% richest workers, which is the precise opposite of what a welfare state should do, one has to wonder at the justification.

The students' struggle is just as wrong

The protest by the students is equally wrong. They demand that the state allow them to pay low tuition, about a third of the real cost. It is morally indefensible. Most of the students hail from the middle and high classes. Their tuition is already subsidized by 70% and the state wants to reduce the subsidy to 50%, that's the whole issue that has them at the barricades. But their subsidy is paid by all taxpayers, including the lower classes, whose children are less likely to meet the requirements of higher education.

The defects of the Israeli education system bar the children of the poor from developing the skill set needed to get into university and stay there. It is the state's duty to help the poor rise to meet the requirements, which would take investment in fundamental education, not increasing the subsidy for people who already met the requirements.

It is the moral duty of the state to assure that anybody who does meet the criteria, should be able to obtain higher education. It can do that through scholarships and cheap loans. That is what the students should be fighting for, not to be pampered at the expense of everybody else.