Some clarifications
1. status of children of non-citizens who were born in Israel – I know of American kollel couples who had children born while they were in Israel on student visas. Their kids would have become Israelli citizens, to avoid that they had to go down to the misrad hapnim and deny/forgo citizenship.
2. Being a citizen does not equal having a passport. One can have citizenship and never apply for a passport, as long as one does not have to travel in/out of the country.
3. There is no advantage to getting Israeli citizenship if one lives in the US. As LC said, you technically have to pay bituach leumi even while in Chul, which would be a problem if you would then move to Israel and apply for medical coverage- you would owe all that back bituach leumi. Trips to Israel will be more complicated if you are a male above 18 who is eligible for the draft. Also, if you do want to make Aliya, you may not qualify for certain benefits as a Toshav Chozer vs a new Oleh. As far as expenses, tourists can get VAT back at the airport for some purchases, Israelis can’t. But hotels charge more for tourists than they do for locals. There used to be 2 price lists in some places- I am not sure if that was actually legal. If G-d forbid one had to flee the US and wanted to take refuge in Israel, the Law of Return would guarantee you would be able to move to Israel even if you did not previously have citizenship/passport, as long as you can prove you’re Jewish.
4. The new Israeli biometric passport is still valid for 10 years for adults (5 years for kids) unless you don’t agree to save your fingerprints in the database. Adult passport costs as little as $45 if you pay online during the winter months, if you pay in the local misrad hapnim it is around $75. So it’s way cheaper than a US passport (renewal $110/adult, first time $145). Don’t know how much it costs to renew it from outside of Israel.
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