WASHINGTON, Sept. 23 (UPI) -- A U.S.-Mexico Social Security partnership, if approved, would greatly benefit illegal Mexican immigrants, while costing the United States billions, an immigration think tank representative argued at a Congressional panel discussion Wednesday. But proponents say that the move will generate millions in tax savings for U.S. workers and their employers.
Marti Dinerstein, President of Immigration Matters and Fellow at the Center for Immigration Studies in Washington, D.C., said that because of program differences between the countries, as well as the number of Mexican illegal immigrants in the United States, the proposed agreement would be lopsided in Mexico's favor.
The agreement, signed in June of this year, would remove from U.S. citizens working for U.S. companies in Mexico the burden of paying Social Security taxes to both countries, the Social Security Administration said in a statement. The agreement also will remove the double-taxation requirement for Mexican citizens working for Mexican companies in the United States.
Currently, U.S. companies that employ U.S. citizens in Mexico are required to contribute to both the U.S. and Mexican Social Security systems. When the agreement takes effect, U.S. and Mexican employers and their employees will contribute to either the U.S. or Mexican Social Security systems, instead of both. This will result in approximately 3,000 U.S. workers and their employers sharing in tax savings of $140 million over the first five years of the agreement, SSA said.
The agreement also will improve Social Security coverage for people who work in both countries, SSA explained. Currently, some workers who have worked in both the United States and Mexico fail to qualify for Social Security benefits. Under the new agreement, workers and their family members can qualify for pro-rated U.S. or Mexican benefits based on combined credits from both countries. Approximately 50,000 U.S. and Mexican workers would receive benefits after the first five years of the agreement, SSA said.
The agreement must be reviewed by the U.S. Congress and approved by the Mexican Senate before it can take effect. The United States has similar Social Security agreements with 20 other countries, including Australia, Canada, Chile, South Korea and nearly every country in Western Europe.
In addition, the U.S. signed a Social Security agreement with Japan in February 2004, which is expected to take effect in late 2005.
But a Social Security merger with Mexico would be unfair because most of the beneficiaries would be illegal immigrants, who were not previously employed by the Mexican government, Dinerstein said. Mexicans currently make up 69 percent of the illegal-immigrant population. In previous Social Security mergers, both the United States and the partner nation enjoyed equal benefits, Dinerstein said.
She said the totalization agreement, if approved, would make for a long-term drain of U.S. funds into Mexico, whose economy would be greatly helped by Mexicans, permanently living in the United States, sending money back home.
The few Americans able to benefit from the totalization (around 3,000 Americans work in Mexico, compared to the 9.2 million Mexicans living in the United States) would not receive as many positive effects as Mexicans would from American Social Security. The U.S. system helps low-wage earners by giving them far more then they contribute, while Mexican Social Security gives the worker only exactly what they contribute, along with accrued interest, Dinerstein explained.
Dinerstein said that the Mexican government officials are pressuring the United States to accept their agenda through repetition of two points. They say that the United States should focus on the war on terror and stop harassing immigrants who only want a better life, and that it is only fair for Mexico to be treated like Canada, another U.S. Social Security partner. But Dinerstein maintained that Mexico's situation is fundamentally different then other Social Security partner countries and that this agreement would hurt America financially.
