Jerusalem is not Israel - it is under military occupation and its incorrect to described it as such on Passports of those born in that city. Looks like the problem just get worse.
U.S. Jewish group appeals against placing 'Jerusalem, Israel' on passports
Americans for Peace Now, the U.S. partner of Israel’s leftist Peace Now organization, has filed an amicus brief with the United States Supreme Court in order to oppose listing “Israel” as home country in the passports of those born in Jerusalem.
Since Israel’s founding, the American government has not recognized any sovereignty over Jerusalem, be it Israel, Palestinian or Jordanian. As part of this policy, the U.S. embassy to Israel was established in Tel Aviv, despite a law passed in Congress, calling for the embassy to be moved to Jerusalem.
Furthermore, in passports of Jerusalem-born American citizens, the name of the city appears without any reference to a home country. On the other hand, passports of Tel Aviv-born citizens read “Tel Aviv, Israel”.
In 2002, Congress passed a law which states that any American citizen born in Jerusalem who makes a special request is able to request that “Israel” be written as their country of birth. Former President George W. Bush did not follow the law, stating that the law interferes with the president’s constitutional authority to “conduct the nation’s foreign affairs and to supervise the unitary executive branch.”
On the other hand, the law does not allow Palestinian residents of Jerusalem to list “Palestine” in their passports, despite regulations which allow Palestinians born in East Jerusalem before 1948 to list “Palestine”, with no reference to Jerusalem (Palestine was considered an official sovereign entity before the founding of the state of Israel).
Three months after the law passed, Menachem Zivotofsky was born in Jerusalem. His parents, both of whom are American citizens, requested his passport to list Israel as the country of birth. When the U.S. embassy refused, the family appealed to the U.S. Federal Court. A federal judge rejected the appeal, stating that the matter was a “political matter”.
The family refused to give up, and decided to appeal to the Supreme Court, which will decide next week on which authority is responsible for recognition of the sovereignty of foreign countries.