You can also write to this address if you want to propose negotiating new agreements with certain countries. In developing its negotiating plans, the SSA attaches considerable importance to the interests of workers and employers who will be affected by potential agreements. As is easy to see, the worker`s foreign social security carries a much higher tax burden on the employer than the nominal social security tax alone. According to the tax rates of the other country, it is known in some countries that this “pyramid effect” increases the cost of social security for an employer`s social security up to 65-70 percent of the worker`s salary, as shown below. Since the 1970s, U.S. negotiators have entered into bilateral agreements with 28 major trading partners to coordinate social security coverage and social benefits for people living and working in more than one country. They are called “totalization agreements” and are similar in the function and structure of contracts and are legally considered to be executive agreements of Congress concluded in accordance with the law. The agreements have three main objectives: the elimination of double taxation of income, the granting of protection to workers who have shared their professional careers between the United States and another country, and the full payment of benefits to residents of both countries. This article briefly describes totalization agreements, tells their stories and discusses proposals to modernize and improve these agreements. The agreement with Italy is a departure from other US agreements because it does not regulate the people cashed in.
As in other agreements, the basic criterion of coverage is the territorial rule. However, the coverage of foreign workers is mainly based on the nationality of the worker. If an employed or self-employed U.S. citizen in Italy would be covered by U.S. Social Security without the agreement, he will remain covered by the U.S. program and exempt from Italian coverage and contributions. Under these agreements, a worker seconded by an employer from one country to another country for a period of five years or less is covered only by the sending country.