Global tax hunters thought new OECD rules on corporate-tax “avoidance” would turn on a revenue spigot in high-tax countries. Not so fast. Instead, the new rules may encourage more competition to attract businesses with lower tax rates, at least among the world’s smarter lawmakers. Look at Israel.

“We will be reducing taxes by billions of shekels,” Finance Minister Moshe Kahlon said last week, unveiling tax-rate cuts on some corporate and personal income. While details of the personal-tax cut aren’t clear, Mr. Kahlon is proposing...