Israeli Study: Brain Drain Costs Treasury Billions of Shekels

A recent Israeli study reveals that the emigration of skilled professionals and talent from Israel is causing escalating tax losses for the treasury, rising from about half a billion shekels annually until 2019 to about 1.2 billion shekels in 2023 and 2024, an increase of roughly 700 million shekels per year. The study warns that if this trend continues, cumulative losses could reach about 3.5 billion shekels annually within five years, with money transfers abroad doubling.

A recent Israeli study has revealed that the emigration of skilled professionals and talent from Israel is beginning to have escalating financial effects on the state treasury, with a notable rise in tax losses resulting from the departure of high-income earners. The study was prepared by Dr. Ariel Graizes and Nili Ben Tovim from the Planning and Economics Division of the Israeli Occupation Tax Authority, and it was based on estimating the value of taxes that Israelis who left the country between 2015 and 2024 would have paid had they continued to reside in Israel with the same income levels. The results showed that annual tax losses rose from about half a billion shekels until 2019 to about 1.2 billion shekels during 2023 and 2024, an increase of roughly 700 million shekels per year. The study warned that if this trend continues over the next five years, cumulative tax losses could reach about 3.5 billion shekels annually, posing a growing burden on public finances. The study also noted an increase in the pace of money transfers abroad, with the number of people who reported to the tax authority transferring more than half a million shekels abroad doubling during 2023 and 2024, and rising fourfold among Israelis who left the country, indicating a widening phenomenon of capital transfer.