Design Parameters
Scenario Parameters
| Low Displacement | Strong | AGI | ASI | |
|---|---|---|---|---|
| α (TFP) | ||||
| s′L (labor share) | ||||
| u (unemployment %) |
α AI productivity multiplier
s′L Post-AI labor income share
u Unemployment rate
See funding gap and windfall capture for a proposed floor
Find parameters needed for gap = 0 using the proposed floor above
Scenario Parameters
| Low Displacement | Strong | AGI | ASI | |
|---|---|---|---|---|
| δ Deflation (%) | 5% | 6% | 12% | 13% |
Design Parameters
CES Production
σ
Elasticity of substitution
NIT Design
D
Disregard (NIS/mo)
τ
Taper rate
ψ
Single-parent top-up
TU
Take-up rate (%)
Buf
GDP buffer (%)
Deflation Model
θ
AI consumption exposure (%)
AI Attribution
κ
Attribution coef (%)
ρ
Ring-fence rate (%)
Consolidation
Adm
Admin savings (%)
Economy (BOI/CBS 2024)
- Y₀ = 1,694B GDP
- sL = 0.56 Labor share
- K₀ = 4,708B Capital (PWT)
- L = 4.5M Labor force
- u₀ = 3% Natural unemp.
- HH = 2.98M Households
Poverty (BTL 2023)
- z = 3,324 Poverty line
- 20.7% Poverty rate
- 39.5% Poverty gap
- G = 0.363 Gini coef.
- w̃ = 10,586 Median wage
Elasticities
- εint = 0.51 Intensive (Taub)
- εext = 0.28 Extensive (Taub)
- σ = 1.5 CES (Chirinko)
OECD Equivalence Scale
- 1.0 First adult
- 0.5 Additional adult
- 0.3 Each child
VAT (ITA/CEIC)
- v₀ = 18% Baseline rate
- β = 92% Pass-through
- c/Y = 53.9% Consumption
Deflation (BLS/OECD)
- δBLS = 5% Software deflation
- θ = 40% AI exposure (OECD)
Taxes (MOF/Knesset)
- tcorp = 23% Corporate rate
- tCG = 25% Cap gains rate
- T₀ = 50.3B Corp tax trend
- CG₀ = 8.6B CG tax trend
Public Sector (MOF/BTL)
- W = 203B Public wages
- IS = 1.6B Income support
- UE = 5.6B Unemployment
- DI = 15.7B Disability
Results
Economic Growth & Automation Surplus
| Scenario | gY | Y1 | ΔS |
|---|
gY GDP growth rate
Y1 Post-AI GDP
ΔS Automation surplus (available for redistribution)
Windfall Capture Analysis
| Scenario | Floor M | Cost | Revenue | Gap | ΔΠ | Gap/ΔΠ |
|---|
Gap Cost - Revenue
ΔΠ sK'Y₁-sKY₀ total capital change
ΔΠ = total change in capital income (theoretical max for redistribution).
Revenue Breakdown (B NIS)
| Scenario | VAT | Profits | CG | Gov | Consol | Total |
|---|
VAT Dynamic VAT revenue
Profits Ring-fenced corporate profits
CG Ring-fenced capital gains
Gov Ring-fenced Gov Wages
Consol Program consolidation
Revenue-Constrained Floors
| Scenario | Floor M | Breakeven | M/z | Status |
|---|
M Monthly NIT floor (single adult)
Breakeven Income where benefit = 0
M/z Floor as ratio of poverty line
Household NIT Floor (NIS/mo)
| Household Type | Low Displacement | Strong | AGI | ASI |
|---|
Scale: 1.0 (adult) + 0.5 (2nd adult) + 0.3 (child). Single parent +900.
Cost by Income Decile (AGI Scenario, 85% take-up)
| Decile | Income/mo | Std Persons | Households | Benefit/mo | EMTR | Cost/yr (B) |
|---|
Income/mo Equivalized monthly income (NIS)
Std Persons Avg equivalent adults per HH
Benefit/mo Monthly NIT benefit per HH
EMTR Effective marginal tax rate (t + τ)
Cost/yr Annual cost at 85% take-up
Costs computed via microsimulation using within-decile distributions (Beta for income, c=2.16; Gamma for household size).
Poverty & Inequality
| Scenario | Gini | Poverty % | ythresh |
|---|
Gini Income inequality (0-1)
Poverty Poverty rate (fixed z=3,324)
ythresh Pre-NIT income below which poverty persists
Note: 0% poverty reflects decile averages - all means exceed z post-NIT. Individual poverty persists below ythresh.
UHI Funding Architecture (AGI Scenario)
Path to Universal High Income floor of 15,000 NIS/mo (~142% of median wage)
| Source | B NIS | % of Total | Mechanism |
|---|
Existing VAT + Ring-fencing + Consolidation
Kohelet Policy Forum proposals
Windfall Levy Direct capital tax on automation gains
*Pillar Two requires global coordination. This is one illustrative configuration; other revenue streams could substitute.