The U.S social security system was first introduced in the year 1935 under the Social Security Act by the then President Roosevelt’s administration. The aim of this programme was to cater for the elderly and retired, by offering certain special benefits to them. In the United States, the Social Security system is officially known as OASDI, which in full is ‘Old Age, Survivor and Disability Insurance’.
This is attributed to its three main components as self-explained by the term (Hyman, 2008). In the U.S, social security mainly handles the following; retirement, survivorship, disability and death. This programme is funded by certain payroll taxes that are dedicated to this cause. These payroll taxes are referred to as Federal Insurance Contributions.
In Canada, the Social Security system is also meant to cater for the old and retired. It is also principally used to give certain privileges to the old, the disabled and those that are disadvantaged. In order to work in Canada, one ought to have a social security number. This is usually a nine digit number. Another important factor to note about Canada’s social security system is the fact that all persons who work in this country contribute to this fund through taxes. The taxed amounts are deducted directly from their pay and deposited in this kitty.
There are certain observable similarities between the Canadian social security system and the U.S social security system. One of the most obvious is the fact that both are clearly intended to benefit the old and disabled in society. The plans are to create certain privileges to the underprivileged by giving them certain benefits. Another similarity is the fact that both systems are controlled by a statute that provides for a fund into which payroll taxes are deposited to fund these systems. The citizens in the country are taxed from their pay and that money used to fund the systems.
On the other hand, a noticeable objective difference between the Canadian Social Security system and the United States’ Social Security system is the ratio of recipients against the workers. This ratio is higher in the U.S in comparison to the Canadian system. In other words, the number of people contributing to the Social Security fund in the U.S is not as high as the number of people benefiting from the same fund. In other words, more people are required to contribute to the fund in order to satisfy one beneficiary. This is not the case in Canada. The number of people inputting funds into the Social Security Fund account is more or less at equilibrium with those that benefit from the same (Turner, 2001).
A subjunctive analysis can be made to come up with the conclusion that both systems share a great similarity. The Canadian system borrows heavily from the U.S system. This can be seen through instances where the funds in Canada are managed at Provincial level while, in the U.S, the funds are managed at the State level (Livingston, 2008). This is essentially one and the same thing. The systems are also closely related through their agreement known as the U.S-Canadian Social Security Agreement. This agreement tries to synchronise these two systems and make it possible for people working in both countries with dual citizenship, to pay taxes to a single social security fund by having a single social security number.
A major recommendation for the U.S social security system is that, in order to avoid the diminishing of the fund, either the people who are employed need to be taxed slightly higher than the normal or the unemployed should be effectively brought back into the workforce in order to keep the supply high.
References
- Hyman, D. N. (2008). Public finance: a contemporary application of theory to policy (9th ed.). Mason, OH: Thomson/South-Western.
- Livingston, S. G. (2008). U.S. social security: a reference handbook. Santa Barbara, Calif.: ABC-CLIO.
- Turner, J. A. (2001). Pay at risk: compensation and employment risk in the United States and Canada. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.