Nathanael Kapner over at RealJewNews.com has produced an excellent article outlining why the state of Israel should not exist. Read Why Israel Should Not Exist at http://www.realjewnews.com/?p=199
I will detail several additional reasons why the State of Israel should not exist.
The nation of Israel came to be after the people of Israel acquired land in Canaan. Leviticus 25:38, “I am the LORD your God, which brought you forth out of the land of Egypt, to give you the land of Canaan, and to be your God.” However, the Jewish people constantly rebelled against God. God, in his love and mercy, decided to establish a new covenant. Hebrews 8 discusses the new covenant,
 Now of the things which we have spoken this is the sum: We have such an high priest, who is set on the right hand of the throne of the Majesty in the heavens;
 A minister of the sanctuary, and of the true tabernacle, which the Lord pitched, and not man.
 For every high priest is ordained to offer gifts and sacrifices: wherefore it is of necessity that this man have somewhat also to offer.
 For if he were on earth, he should not be a priest, seeing that there are priests that offer gifts according to the law:
 Who serve unto the example and shadow of heavenly things, as Moses was admonished of God when he was about to make the tabernacle: for, See, saith he, that thou make all things according to the pattern shewed to thee in the mount.
 But now hath he obtained a more excellent ministry, by how much also he is the mediator of a better covenant, which was established upon better promises.
 For if that first covenant had been faultless, then should no place have been sought for the second.
 For finding fault with them, he saith, Behold, the days come, saith the Lord, when I will make a new covenant with the house of Israel and with the house of Judah:
 Not according to the covenant that I made with their fathers in the day when I took them by the hand to lead them out of the land of Egypt; because they continued not in my covenant, and I regarded them not, saith the Lord.
 For this is the covenant that I will make with the house of Israel after those days, saith the Lord; I will put my laws into their mind, and write them in their hearts: and I will be to them a God, and they shall be to me a people:
 And they shall not teach every man his neighbour, and every man his brother, saying, Know the Lord: for all shall know me, from the least to the greatest.
 For I will be merciful to their unrighteousness, and their sins and their iniquities will I remember no more.
 In that he saith, A new covenant, he hath made the first old. Now that which decayeth and waxeth old is ready to vanish away.
In the old covenant, there were certain laws detailing the distribution of the land to the Jews. The Levites were given cities among the inheritance of the other eleven tribes. Deuteronomy 18:1-2 explains why the Levites had no inheritance with Israel,
 The priests the Levites, and all the tribe of Levi, shall have no part nor inheritance with Israel: they shall eat the offerings of the LORD made by fire, and his inheritance.
 Therefore shall they have no inheritance among their brethren: the LORD is their inheritance, as he hath said unto them.
However, the Levitical priesthood of the old covenant has been done away with. Thus, the laws of the old covenant governing the distribution of the land have been done away with also. The apostle Paul stated in Hebrews 7:11-12,
 If therefore perfection were by the Levitical priesthood, (for under it the people received the law,) what further need was there that another priest should rise after the order of Melchisedec, and not be called after the order of Aaron?
 For the priesthood being changed, there is made of necessity a change also of the law.
What is the new priesthood? It is the priesthood of believers, sanctified by the blood of the Lord Jesus Christ. Revelation 1:6-7,
 And from Jesus Christ, who is the faithful witness, and the first begotten of the dead, and the prince of the kings of the earth. Unto him that loved us, and washed us from our sins in his own blood,
 And hath made us kings and priests unto God and his Father; to him be glory and dominion for ever and ever. Amen.
Ephesians 2:11-15 explains that the wall between Gentiles and Jews was broken by the Lord Jesus,
 Wherefore remember, that ye being in time past Gentiles in the flesh, who are called Uncircumcision by that which is called the Circumcision in the flesh made by hands;
 That at that time ye were without Christ, being aliens from the commonwealth of Israel, and strangers from the covenants of promise, having no hope, and without God in the world:
 But now in Christ Jesus ye who sometimes were far off are made nigh by the blood of Christ.
 For he is our peace, who hath made both one, and hath broken down the middle wall of partition between us;
 Having abolished in his flesh the enmity, even the law of commandments contained in ordinances; for to make in himself of twain one new man, so making peace;
So, the Jews are those who are of Christ and not after the flesh. Romans 2:28-29,
 For he is not a Jew, which is one outwardly; neither is that circumcision, which is outward in the flesh:
 But he is a Jew, which is one inwardly; and circumcision is that of the heart, in the spirit, and not in the letter; whose praise is not of men, but of God.
The Lord Jesus makes it clear that he does not seek to establish an earthly kingdom to be ruled by fleshly Jews. John 18:36,
 Jesus answered, My kingdom is not of this world: if my kingdom were of this world, then would my servants fight, that I should not be delivered to the Jews: but now is my kingdom not from hence.
The apostle Paul also explains, in Hebrews 12:22-29, that the kingdom of the Lord Jesus Christ is heavenly not earthly,
 But ye are come unto mount Sion, and unto the city of the living God, the heavenly Jerusalem, and to an innumerable company of angels,
 To the general assembly and church of the firstborn, which are written in heaven, and to God the Judge of all, and to the spirits of just men made perfect,
 And to Jesus the mediator of the new covenant, and to the blood of sprinkling, that speaketh better things than that of Abel.
 See that ye refuse not him that speaketh. For if they escaped not who refused him that spake on earth, much more shall not we escape, if we turn away from him that speaketh from heaven:
 Whose voice then shook the earth: but now he hath promised, saying, Yet once more I shake not the earth only, but also heaven.
 And this word, Yet once more, signifieth the removing of those things that are shaken, as of things that are made, that those things which cannot be shaken may remain.
 Wherefore we receiving a kingdom which cannot be moved, let us have grace, whereby we may serve God acceptably with reverence and godly fear:
 For our God is a consuming fire.