Newsbytes
June 2004
United
States and Mexico Sign Social Security Agreement
Agreement to Benefit U.S. Workers and Employers
From the Social Security Administration Website
Jo Anne Barnhart, Commissioner of Social Security,
signed an agreement today with Dr. Santiago Levy
Algazi, Director General, Mexican Social Security
Institute, that will remove from U.S. citizens working
for U.S. companies in Mexico the burden of paying
social security taxes to both countries. The agreement
also will remove the double taxation requirement
for Mexican citizens working for Mexican companies
in the United States. “This agreement eliminates
a serious and unnecessary impediment to American
and Mexican businesses and their employees,”
Commissioner Barnhart stated. “Just as important,
it promotes equity and fairness for workers who
divide their careers between our two countries.”
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, but not 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.
The
agreement also will improve social security protection
for people who work in both countries. At present,
some workers who have divided their careers between
the United States and Mexico fail to qualify for
social security benefits from one or both countries
because they do not meet minimum eligibility requirements.
Under the agreement it will be possible for workers
and their family members to qualify for pro-rated
U.S. or Mexican benefits based on combined credits
from both countries. This will result in approximately
50,000 U.S. and Mexican workers receiving benefits
after the first five years of the agreement.
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.
