United States and Mexico Sign Social Security
Agreement to Benefit U.S. Workers and Employers
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.
NOTE TO CORRESPONDENTS: A fact sheet providing more
information about the Social Security agreement between the U.S.
and Mexico is attached. To find out more about agreements with
other countries go to http://www.socialsecurity.gov/international/.
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