India Asking for FICA refunds

Date: Monday, June 16, 2003 11:28 AM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

If you aren't familiar with totalization, read this before proceeding
with the rest of the newsletter:
http://www.zazona.com/shameh1b/H1BFAQs.htm#DoWorkersPayFICA

Indian H-1B advocacy groups such as the Immigrant Support Network
(http://www.isn.org/) have lobbied for a totalization agreement with
the United States for many years. The ISN saw a ray of hope for an
agreement with India when talks began for a totalization agreement with
Mexico that would require the United States to transfer up to $1
billion a year to Mexico for the Mexican workers who pay social
security taxes in the U.S.

CII, an Indian industry trade group lobbied in the United States June
8-13. They were able to talk directly to U.S. Trade Representative
Robert Zoellick about totalization. Zoellick gave CII assurances that
India's request for a totalisation will be considered.

India hasn't been able to get a totalization agreement because one of
the main requirements is that both countries have similar social
security systems. Commerce and Law Minister Arun Jaitley is making the
argument that although India doesn't have a centralized social security
system, the country had a layered system of social security. Therefore
he argues that a totalization agreement with the U.S. should be made.

Jaitley's argument doesn't hold up under close scrutiny. That's because
India's social security system cannot be compared to the United States,
but of course that could be said of Mexico also. Both of these articles
say that only 10% of India's working population has been provided with
any type of social security:
http://www.id21.org/insights/insights42/insights-iss42-art01.html
http://www.globalaging.org/health/world/socindia.pdf

India is in desperate need of money to fund their social security
system because it's in worse shape than ours. That's because India's
population is young and the ratio of elderly to working-age people is
expected to double in the next 30 years.

Indian H-1Bs could help fund the social security system in India if a
totalization agreement was made. The article below states that India
wants refunds from the U.S. totaling $500,000,000 a year. That money
would be transferred from our SS system to theirs.

The amount of SS money India wants gives an interesting clue to the
amount of money H-1Bs are taking away from American workers. Let's do
some numbers:

$500,000,000 in SS payments from H-1Bs
15% of their wages are decucted for FICA
Therefore, the total salaries of H-1Bs from India = $3,333,333,333

The $3.3 billion dollars calculated above doesn't include non-Indian
H-1Bs. Since Indians make up about 45% of the total number of H-1Bs,
the total wages made by H-1Bs can be calculated.

Total wages made by H-1Bs per year is approx. $7.3 Billion

These numbers raise two very important issues:

* Why is our government taking away $7.3 billion dollars in wages from
U.S. citizens?

* Why is it in our best interest to withdraw $500 million from our
Social Security system to help India's failed system?

* If agreements are made with Mexico and India, the US social security
system will pay $1.5 billion per year to these two countries. Are US
wage earners willing to pay more FICA in order to bankroll these
payments?

http://economictimes.indiatimes.com/cms.dll/html/uncomp/articleshow?msid=22062

US assures social security benefits for Indian techies

IANS[ SATURDAY, JUNE 14, 2003 02:09:08 AM ]
WASHINGTON: The US has assured India that its plea for a
totalisation agreement would be considered to ensure social
security benefits for Indian professionals who have worked in America.

Addressing a press conference here, visiting Indian commerce and
industry minister Arun Jaitley said US trade representative Robert
Zoellick gave him the assurance when he raised the issue with US
officials. Besides Zoellick, Jaitley met commerce secretary Bob Evans.

The agreement, if signed, could help thousands of IT professionals who
pay social security taxes while they live and work in the US but are
unable to derive the benefits once they leave the country.

The minister explained that many of the IT professionals who come to
the US on H1-B visas face a handicap in terms of social security
deductions. The duration of their H1-B visas are for three years and
another extension for three years, which makes it a total of six years.

But under US rules they are entitled to the benefits only if they work
for 10 years. IT and other professionals contribute $500m per year to
the social security administration, but they dont get back any of
the benefits once they return home.

The totalisation agreement is pursuant to the social security
requirements in the US where a deduction of about 15% is made from the
earnings towards social security contribution of all professionals, who
come for temporary work here."

Now to get the benefit of social security you have to spend 40 quarters
here, that is 10 years. But the visas that are generally available to
these professionals who are here only for three plus three years. As a
result, our professionals, who are coming to execute their work here
make the contributions for six years but would never be able to get the
advantage back.

In terms of sheer volume this figure comes to $500m per year. This is
the amount of quantum involved. And we have been raising this for a
very long period. Mr Jaitley said to remedy the situation, We want a
totalisation agreement, on the lines of those that exist between the US
and 15 other countries.

When the issue was first raised with the US trade representative, the
minister revealed, the US social security administration wrote to him,
seeking some clarifications. We then sent them a response and further
details are being awaited, Mr Jaitley said.

http://www.hindustantimes.com/news/181_280174,00050001.htm

India seeks refund of dues to past H1B visa holders

S Rajagopalan
Washington, June 12

India has built up a strong case for the US refunding to Indian
professionals their social security contributions made during their
temporary employment in the US under H1B visas. The contributions run
into $500 million a year.

Commerce and Law Minister Arun Jaitley, during discussions with US
Trade Representative Robert Zoellick here, has sought action on
India's request for a "totalisation agreement" to refund the
contributions to past H1B visa holders who have returned home.

The agreement is not in sight yet, but Jaitley felt some progress has
been made with the USTR at least responding on the subject now. Having
provided some clarifications last week, India now awaits an early
American response.

Under the US's social security scheme, deductions up to 15 per cent of
an employee's salary are made for social security, but the benefits
become available only after 10 years. For Indians returning home after

working in the US for six years, the maximum duration of H1B visas,

this contribution has turned out to be a big drain.

Jaitley also took up with Zoellick the anti-dumping issue sought to be
raised on India's shrimp exports by the US's Southern Shrimp Alliance.
He argued that this alliance cannot raise a dispute since it does not
have the requisite strength specified under the US law. India, as the
largest exporter of shrimp to the US, has sought "fair application" of
its rule.

The Commerce Minister also made out a case for the US opening the
doors to Indian mangoes, which are presently barred on the ground pest
risk. Jaitley said a risk analysis of Indian mangoes has been
submitted recently.

Another pending issued taken up Jaitley concerns restoration of the
GSP (Generalised Scheme of Preferences) on 842 items. The facility was
withdrawn over the last 11 years because of "inadequate" intellectual
property rights protection in India. Now that Parliament has amended
the IPR law, India feels it's time to restore GSP. The dialogue on
this is still continuing.

Jaitley, who also held meetings with Commerce Secretary Don Evans,
presented an Indian perspective on the World Trade Organisation issues
at the Carnegie Endowment for Peace.

http://sify.com/news/othernews/fullstory.php?id=13170647&vsv=94

On India's request that US government refund the social security
contributions of Indian professional who come to the US for temporary
work, the USTR had responded that such a refund could be made only to a
comparable social security system in India.

Under US law, 15 per cent of wages, including those of temporary
workers, would have to go to the social security fund, the benefits of
which could be availed only after 10 years.

Indian professionals who came to the US for temporary work were first
issued a three-year visa followed by another three-year extension,
Jaitely said.

He said India had responded on June 5 that although there was no
centralised social security system in India like that in the US, the
country had a layered system of social security.

''We feel that on the strength of the social security systems our
professional does get entitled to this refund,'' he added.

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