Mike Kashnow and Baruch Swinkin in Ramat Bet Shemesh mountains

With the war raging in Gaza, there are aspects of what it means to serve in the IDF that never make it to the news, and no one ever hears about.

Last week, we touched upon the valuable work of Route 38, which helps American employees in Israel, and the L’Maan Achai organization, which helps American employees in Israel who do not qualify for compensation from the Israeli government when called up for service.

This is about the human cost of war. That is not about the F-35s and other advanced military hardware, this is about the part of your life that is taxable and subject to fees and penalties if all is not handled in an orderly and legal fashion.

That’s where the brilliance of Route 38 comes into play. Founded by Mike Kashnow and Baruch Swinkin, the company helps a group of people that would normally fall between the cracks in the system. After just a few conversations with Mike, I have a much better idea about how the Israeli system works for those who have made aliyah and find themselves caught between two worlds.

Why talk about this now, especially in light of the war in Gaza? Actually, there are several reasons for this and the role companies like Route 38 can play in smoothing out the process.

The main problem with regard to the war is that so many reservists are being called up for extensive periods of time. Many of them are employed by U.S. companies and are not able to bill for the hours missed while serving in the IDF.

Reservists who work for Israeli companies are compensated by the Israeli government for time missed, but those who work for U.S. or other overseas companies are not covered for absences, and are, for the most part, out of luck unless their company is willing to pay them for missed work.

This is where Route 38 comes into the picture. They handle all the payroll for the American company, thereby allowing the employee to continue working seamlessly for the U.S. company while actually being on the books of Route 38, an Israeli company, thus sparing them Social Security taxes while making them eligible for compensation and benefits from the Israeli government for missed work.

Not only is this smart and legal, but also purposeful. There are several issues going on now that pertain to the war in Gaza. The first is that families whose breadwinner has been called up to serve are losing important income. On that count, Route 38 and L’Maan Achai are working to raise funds to replace the income of those caught in this unusual situation.

To that end, Route 38 is anticipating a rush to sign up with them as soon as the war is over or the reservists begin to come home as the case is today. Israel has been sending home thousands of reservists as their direction in the war shifts and also because of the impact these absences are having on industries.

As previously mentioned, this unusual aspect of the war will always get the least amount of attention because it deals with American expatriates, tax laws, and aspects of Israeli life and culture that only apply to those who are in this unusual bureaucratic situation.

I have heard recently about the growing number of olim who are able to keep their American jobs, most likely due to the aftermath of the Covid experience, when technology permitted employees to work offsite and in some cases offshore, including working in Israel, without missing a beat.

In fact, Mike and Baruch point out that their business increased considerably after Covid from companies looking to fill positions in Israel without having to deal with the Israeli tax issues. Even without the war, companies like Route 38 can still play a central role in Israeli society, mostly for those whose income derives from outside Israel, and how that financial reality can complicate the tax obligations in both countries.

One of the interesting issues that Mike brought up pertains to new olim who are the beneficiaries of a very generous tax setup for income derived outside of the country. For example, when you make aliyah, one of the benefits is that the new immigrant is exempt from Israeli taxes for the first ten years. Naturally, that is designed to encourage Jews from around the world to make Israel their home. After the first ten years, the tax obligation is averaged between the native country and Israel. That is fair to the countries and people involved.

As immigrants themselves since the 1990s, both Mike and Baruch and their team at Route 38 have a keen understanding of the diverse nature of Middle Eastern culture when stacked up against that of the West.

When our conversation shifted to the ongoing war in Gaza, Mike pointed out that there is a dramatic difference between how we see things and how those in the Middle East see things. He said the religious beliefs held by the people of Gaza and surrounding Arab countries cannot be reconciled with our Western or Israeli view.

The important thing to note about Route 38 is that today they have about 200 employees. Many of these individuals are in their own businesses, but are safer and more secure if they remain on the payroll of Route 38 rather than their U.S.-based employer or company.

It is a matter of business making life simpler and easier to manage, something that should be a fundamental aspect of everyone’s plan to make aliyah, if that plan includes remaining employed by a U.S. employer.

Dealing with complicated tax matters is not something you want to deal with on your own, especially when two countries are involved. For anyone in this position, it won’t take long for you to say: Thank G-d for Route 38.

 

Read more of Larry Gordon’s articles at 5TJT.com. Follow 5 Towns Jewish Times on Facebook, Instagram, and Twitter for updates and live videos. Comments, questions, and suggestions are welcome at 5TJT.com and on Facebook, Instagram, and Twitter.

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