How Japan benefits from the U.S.-Japan Totalization Treaty, (but not vice versa.)

A little bit more on how America is cheated when Japan ignores Americans’ rights to Japanese social insurance (shakai hoken).

What I’ve done is visit the Social Security administration website and downloaded information for all the years in which the totalization agreement was in effect between Japan and the United States. Since it began on October 1, 2005, there is information for the years 2006 through 2010.

By 2010, over 32,000 Japanese citizens were getting social security on claims of less than 10 years’ contributions. Recall that anyone (who is not an illegal alien) who has 10 years (technically, 40 credits) of contributions can receive a check. So the numbers listed above are people who contribued for fewer than 10 years, and/or their spouses/survivors.

Even though the agreement with Japan is relatively new, you see how Japan quickly rocketed to the Number Two spot if you list the different countries that have agreements with us. Canada is Number One. Makes sense.

I highly doubt that there are 32,000 Americans collecting government pensions from the Japanese. Excluding, of course, Japanese who come to America and get PR or citizenship. I doubt that there have even been 32,000 Americans who have participated for any length of time in kokumin nenkin or the Shakai Hoken equivalent. Even 3,200 would surprise me.

Why? Because the Japanese systematically deny these coverages to Americans. They do this by not enforcing the social insurance laws. Once employers realize that the social insurance laws are, in large part, voluntary, they do nothing to right this wrong. In fact, righting the wrong just means that they are giving an advantage to their competition, which might still skirt the law.

I am all for old people not living in poverty. But why should it be that young Americans being sent over to work in Japan get shafted out of their future pension, but young (and not-so-young) Japanese coming to America will get theirs?

That number series above will just grow and grow. As you can see, it’s only people born before 1949 who were getting the regular retiree benefit. (There are different rules for survivors and disabled people. I note 13 disabled on the list. I know of just one in Japan.) At some point, it’s going to be embarrassing, with 100,000 Japanese collecting something from America—in addition to those who qualify with just the 10 years. And on the Japanese side, virtually no Americans getting anything because they were in jobs that effectively denied them social insurance coverage.

There is some mechanism to end social insurance agreements. I am reading the regs on it this weekend, and one regulation says a bit about a country qualifying if it collects social insurance taxes or pays social insurance premiums. I wonder how a judge would interpret that. I wonder who has standing to ask a judge. (These are just wonders; I’ve got enough to do.)

Why should Americans be denied the coverage, yet have it so freely be given by us to Japanese?

[Update: Here is the regulation I am wondering about:

Agreements may only be negotiated with countries that have a system of general application in effect. What does this mean? It says it means that social security taxes are collected OR that social security benefits are paid. (I presume the second option is for countries that do not collect specific social security “tax” per se, but pay benefits out of general revenues.)

My concern is this: If there is a country like Japan, with so many gaps and excuses for gaps, is the totalization agreement consistent with that regulation?]

[Update #2: Well, here is one possible way for there to be standing: If an American had done self-employment work in Japan, or intended to. Under US laws, an American is subject to Self Employment Tax (the equivalent of FICA) on earnings worldwide. One exception where that is not so is when a totalization agreement is in effect. In fact, in those situations, you cannot pay Self Employment Tax.

The way the Japanese run, or rather, mis-run, their system, an American seeking out self employment in Japan is at a competitive disadvantage to another American who dodges the kokumin nenkin. In this regard, the totalization agreement harms the first American, because he/she has to bid out his labor at a rate that considers the payment into kokumin nenkin, while the dodger is allowed to get away. In the absence of the agreement format, both Americans would be required to pay Self Employment Tax and the second American would be a tax evader. With the agreement in place, the dodging American can get away with it, and bid lower for work. Therefore, the first American is harmed.]