US not keen on social security pact with India

[Newsjock]

Source: The Tribune (Chandigarh, India)

Even as India and the US continue to work towards building cooperation in diverse fields, Washington has shown reluctance to enter into a social security arrangement with New Delhi under which temporary Indian workers in the US would not have to pay social security taxes.

Sources in the Overseas Indian Affairs Ministry said the US was hesitant to accept the position that New Delhi has taken in terms of the social security system that operates in India.

... The two countries have been negotiating the agreement for nearly four years now but a consensus has eluded them. Once signed, the agreement is expected to benefit hundreds of thousands of Indian H1B workers in the US. The mandatory payment of social security tax has been an issue with them since workers who go back to India after six years of temporary employment in the US either voluntarily or due to lack of sponsorship for permanent residency cannot claim the money they had paid from their earnings. For the permanent residents and citizens, the social security agreement acts something like a social insurance programme at old age.

The US Social Security Administration has a law in place known as ‘Totalisation Agreement’ with about 20 countries, mostly from Europe, on the lines of the social security accord but is somehow not convinced about the utility of such an agreement with India. Under the rule, H-1B workers are exempted from paying social security taxes in the US and can have their deductions sent to their home countries.

India has signed social security agreements with Belgium, France, Germany, Switzerland, Luxembourg, the Netherlands, Hungary and Denmark. Negotiations have been completed with Canada, Czech Republic, Norway and Korea.

Read more: http://www.tribuneindia.com/2010/20100516/main5.htm

[Ruby the Liberal]

1. Not sure how I feel about this. On the one hand,

you have to contribute 40 quarters (10 years) to be eligible for benefits.

On the other hand, I am NOT a fan of the H-1B program as I have yet to be convinced that there aren't unemployed/underemployed Americans who can do the work.

[customerserviceguy]

2. I know how I feel about this

It's not only the workers who would be exempted from FICA (and probably Medicare) taxes. It would be their employers, as well. Given that, wouldn't most employers REALLY want to replace citizens with H-1B's? Its bad enough that corporations outsource our jobs to these countries, this is effectively outsourcing them within our own borders.

[Nay]

3. Exactly. Employers pay HALF of SS taxes for employees, so this

would make visa workers even cheaper. I hope no one thinks this is being done for the employee's benefit.

[MattBaggins]

5. Does this proposal say that the employer is off the hook?

Is this just the employees portion?

I hope they don't enact this anyway. They have to pay into the system just like every other worker in America.

[Ruby the Liberal]

4. Ouch!! Good point, my friend.

VERY good point.

[customerserviceguy]

6. It's already hard enough competing with the rest of the world

that pays starvation wages, why make it any easier on the companies that want to suck down our consumer dollars, yet not spend them on the talent we have available here?