The US Social Security system
In the US, social security refers to a benefits program developed in 1935 under the Social Securities Act. The program aimed at addressing many concerns relating to the payment of retirement benefits. It also encompasses programs such as income for the disable, pension funds, food stamp medical care and public housing. The program offered financial assistance to the citizens who fall under the paradigms of the program (Zastrow, 2009).
It is necessary for individuals to make their contributions to the Social Security Trusts Funds through taxes in order to be entitled for security fund. The Federal Insurance Contributions Act provides for every individual worker’s income be subjected to taxation. A tax rate of 12.4 percent would be made on the first 200 dollars earned in a year. The tax rate is shared equally among the employer and the employee (Stuart & Herrick, 2005). However, individuals who are self employed pay the full amount of 12.4 percent. The tax collected is used to fund the social security system.
The system has a credit system that allows for the contributors to earn a maximum of four credits in a year regardless of their earnings and contributions to the funding system. The amount of compensation is calculated on the basis of a contributor’s 35 highest income-generating years. Retirement benefits acts as a form of insurance because they compensate retirees for losing their job due to retirement. The program also offers unemployment benefits to those who are unemployed as a result of uncontrollable circumstances. In general, the program aims at providing financial relief for US citizens during hard economic times like unemployment.
The Canadian Social Security System
Canada has a wide social security system including pensions and social welfare benefits that that covers almost the whole population. The federal government and provincial government share the responsibility of planning, managing and delivering social security programs (Hepworth, Rooney, & Rooney, 2009). This has ensured that the Canadian population has maximum access to the social security programs. The state funds for the universal pension whereas employers, the self-employed and employees are required to make contributions to the benefit schemes that are related to employment. Such benefit schemes cover maternity pay, unemployment benefits and overall welfare assistance. The country also offers the Child Tax Benefit scheme whereby families with children under the age of 18 receive tax-free monthly payments (Stuart & Herrick, 2005). Residents are provided with hospital services but they are required to meet both the federal and provincial eligibility criteria.
Under the pension fund, payments are made at the age of 65 to individuals who have been living in Canada for the last ten years after attaining the age of eighteen. However, one can receive the pension fund while still employed. Foreign nationals living and working in Canada are required to acquire a Social Insurance Number that will be used in making social security contributions. By 2005, figures indicate that employers and employees contribute 4.95 percent of their earnings to the social security system. Individuals who are self-employed contribute 9.9 percent of their income. Canada has made various social security agreements with other countries to enable individuals outside Canada get benefits from their contributions (Zastrow, 2009).
Comparing the systems
The Canadian and US security systems both provide for a retirement benefits plan. The US provides the Old-Age, Survivors, and Disability Insurance program which is similar to the Canada Pension Plan (Zastrow, 2009). Both plans are compulsory for individuals who are working and earning a taxable income. Their contributions are directly deducted from their salaries towards social security. Both systems offer unemployment benefits to individuals who lose their jobs under uncontrollable circumstances to ensure that they are compensated for the job loss (Zastrow, 2008).
According to research conducted by Wiseman, there exists a wide difference between the US and Canadian social security services. The most recognized difference is that the social security in the US faces fiscal unbalance in the long-run, as opposed to Canadian social security systems. Another study conducted by the Luxembourg Income Study indicates that the Canadian system is more generous than that of the US. Results reveal that US had a poverty rate of 24.7 compared to that of Canada which stood at 7.8 percent. The Canadian social security system provide for a universal pension plan for all individuals aged 65 and above except those who do not meet residency requirements or have a high taxable income (Stuart & Herrick, 2005). In contrast, the US social security system only provides for pensions to individuals who have made contributions towards the system in the last 35 years.
In my own opinion, the Canadian system is more inclusive compared to the US social security system. In Canada, the government offers a Child Tax Benefit to families with children below the age of 18. The benefits are provided in terms of tax-free payments. In contrast, the US mainly concentrates on adults when providing social security benefits (Haight & Gibson, 2005). The US system is relatively fair because it shares the burden of income tax rates. Employees are taxed 12.4 percent on their income an amount that is equally shared between the employee and the employer. The Canadian system however taxes 4.95 percent on the income of employees and employers (Hepworth, Rooney, & Rooney, 2009). In comparing the two tax systems, the US has higher tax rates compared to Canada.
Recommendations for improving the US system
The US social security system should reduce income tax. This will ensure that the working population remains with a substantial amount of disposable income. This will eventually lead to a reduction in poverty levels as they will be able to afford better living conditions (Haight & Gibson, 2005). The government should also consider reducing income tax on self employment to encourage entrepreneurship. The US government should also sign social security agreements with Canada in order to improve their services given that Canada provides superior services.
References
Haight, B & Gibson, F. (2005). Burnside’s working with older adults: group process and techniques. Texas: Jones & Bartlett Learning.
Hepworth, D, Rooney, R & Rooney, G. (2009). Direct Social Work Practice: Theory and Skills. New York: Cengage Learning.
Stuart, P & Herrick, J. (2005). Encyclopedia of social welfare history in North America.
Chicago: SAGE.
Zastrow, C. (2009). Introduction to Social Work and Social Welfare: Empowering People. New York: Cengage Learning.
Zastrow, C. (2008). Social Work with Groups: A Comprehensive Workbook. New York: Cengage Learning.
