Every time an Israeli-founded tech start-up is acquired for hundreds of millions of dollars (or double-digit billions, like Wiz), the first question splashed across the headlines is how much the State of Israel stands to gain in tax revenues.
The answer is, less and less.
That’s because Israel has already lost too many Israeli-born and immigrant entrepreneurs and their businesses to friendlier shores like Delaware and Texas. Israeli legislators have some serious catching up to do if we are ever to scale the Start-Up Nation into a real pro-business environment.
I met Israeli founders this past week at an April 1 law firm conference for Israelis doing business in the US. There, one serial entrepreneur, Ariel Popper, told me that his early-stage hardware start-up, SolidT, was already being courted by senior Canadian and European trade officials, hoping to get him to incorporate there.
While Popper noted the complexities of being an Israeli hardware supplier of multinational companies, he also said, “Financial incentives would make me consider keeping the business in Israel.”
The data is pessimistic: The Global Entrepreneurship Monitor reports declining Israeli competitiveness in categories like tax policy, regulatory burden, and access to entrepreneurial financing. While Israel has been spinning its wheels in the mud of survival mode, countries like the UAE and Ireland have built reputations as places where businesses can start quickly, grow easily, and contribute directly to economic growth.
These factor into why many talented and wealthy Israelis emigrate today: In 2024, Israel saw a net outflow of approximately 200 high-net-worth individuals.
Even the most enthusiastic new immigrants fail out after facing enormous economic hurdles – 15% of immigrants who arrived between 2019 and 2023 left the country.
According to attorney Anna Moshe, senior partner and leader of the emerging companies and VC practice at Pearl Cohen, “Many new immigrants cite barriers to accessing banking services, jobs, investments, and entrepreneurship. It’s a huge economic hit to Israel at a time when we need fresh talent and capital the most.”
So who is still moving to Israel, and why? American investor Michael Hidary’s family made aliyah in 2018, “To fulfill our dream of living in the Jewish homeland. We are proud that our son is serving in the IDF and our daughter is graduating Reichman University after completing her national service. While I enthusiastically invest in Israel, the challenges that we face as olim are not adequately addressed.”
With high corporate and personal taxes, a VAT system that doesn’t play well with its counterparts abroad, regional instability, and bureaucratic friction, even the most optimistic economist wouldn’t recommend Israel as a destination for corporate relocation.
It’s absurd that people who do come, for ideological reasons, even in times like these, must still struggle to make their aliyah (immigration) not be an economic yerida (descent).
Israel's strategy for olim relies on socialism, not capitalism
Israel’s current economic strategy for integrating immigrants is rooted in socialism, not capitalism. While it is generous to individuals, one size does not fit all. New immigrants receive personal subsidies – covering housing, basic income support, language classes, and some tax relief. But these resources do nothing for the economic advancement of entrepreneurs and serious business, the kind that creates jobs for all Israelis.
Israel should create a business-track integration pathway.
This would create a better match between its resources and the economic potential of its immigrants. It would offer eligible immigrants a different set of tools – focused on business formation, investment, and job creation.
This proposed track, Sal Klita Zahav (Gold Integration Benefits Package), could include:
• A reduced corporate tax rate• Tax holidays and accelerated depreciation for new investments• R&D tax credits and milestone-based co-investment grants• Streamlined licensing, legal, and administrative onboarding• Visa facilitation for key non-Israeli hires and general staff (like a tech visa)
Financier Eli Beilin, founder of the Israeli immigrant business association 0110 Alliance, said, “This is the moment to reconceptualize aliyah, from repatriation as survival to a choice for growth and prosperity in the homeland. Olim no longer need to be ‘saved,’ they are game-changers who can make Israel a leading economic center in the Middle East.”
Israelis who are able to successfully launch or expand businesses create employment, deepen capital markets, and generate long-term tax revenue. A program like this could be tied to measurable success indicators: increases in foreign direct investment, new immigrant-founded businesses, and one day, elite global entrepreneurs choosing to establish operations in Israel.
A business incentive package should also apply to Israelis repatriating their capital, assets, or companies. The state’s policies need to reflect the changing nature of migration to and from Israel.
In the days of King Solomon, Israel was a magnet for capital. Ships sailed in from Tarshish, foreign dignitaries brought gold, and silver was said to be “as common as stones” in Jerusalem. It was a place people came to invest, to trade, and to build. Can we do it again?
The writer is a tech communications executive in mergers and acquisitions, and the founder of the Israeli nonprofit Economic Integration Association.