49.7% of Israeli employees did not earn enough to reach the income tax threshold in 2011, the Ministry of Finance's State Revenues Administration reported today. It adds that 52.2% of salaried employees and 33.8% of the self-employed did not meet the threshold. The proportion of employees who did not meet the tax threshold rose to 52.3% in 2012.
The income tax threshold for a man with 2.25 credit points is NIS 4,703 a month.
The report reveals the widening salary gaps in Israel. In 2011, 64,000 Israelis (1.8% of all employees) earned more than NIS 40,000 a month. They accounted for 13% of aggregate gross income, on which they paid a 34% marginal tax rate. 6% of employees earned a gross monthly salary of NIS 21,000-40,000, on which they paid a 33% marginal tax rate. They accounted for 20% of the gross income in Israel.
17% of employees paid 76% of total direct taxes (84% of income taxes and 62% of National Insurance levies and the health tax).
The gross monthly salary rises with age, peaking at an average of NIS 13,000 for workers aged 45-64, and then falls for older workers.
A quarter of employees earn NIS 7,000-14,000 a month, 3% (104,000 employees) earn more than NIS 35,000 a month, and 58% earn less than NIS 7,000 a month.
At the other end of the scale, the average monthly income of the top 1% of employees is NIS 441,898, and their average after-tax monthly income is NIS 376,225. They pay a marginal tax rate of 37.4%. only 25% of the income of the top 1% comes from salaries and pensions, with the bulk coming from capital gains and other income (such as dividends and investments).
Published by Globes [online], Israel business news - www.globes-online.com - on May 19, 2013
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