Hyderabad: The United States is looking at tightening rules around F-1 student visa’s Optional Practical Training (OPT), by introducing a special tax on those working on the special student visa as well as ending tax exemptions for them.
Senator from Arkansas Tom Cotton introduced a legislation called ‘OPT Fair Tax Act” in the United States Congress, which if passed would end tax exemptions for F-1 OPT and STEM OPT workers under the Federal Insurance Contributions Act (FICA).
The FICA tax is a federal payroll tax, which funds the old-age, survivors, and disability insurance (OASDI), also known as Social Security, and Medicare Hospital Insurance (HI) schemes in the United States. In a regular employment setting, both the employer and the employee both are required to pay the FICA tax, with 6.2 per cent of the salary going for Social Security and 1.45 per cent of the salary to Medicare.
For companies hiring foreign students under the OPT scheme, both the employer and the employee are exempted from the FICA tax. According to the Internal Revenue Code (IRC) 3121(b)(19) and Internal Revenue Services (IRS) 26 CFR § 31.3121(b)(19)-1, the FICA tax is exempted for temporary non-immigrant workers in the United States.
If the OPT Fair Tax Act legislation is passed by the Congress, the employee has to pay a total of 7.65 per cent of salary towards Social Security and Medicare. The goal, according to the senators, is to remove incentives for employers in the United States to hire foreigners and hire more Americans.
Senator Cotton, in a release, said, “Our tax code shouldn’t incentivise businesses to hire foreign workers. By ending the FICA tax exemption, we will put American workers first.”
At the core of the taxation, however, lies a major problem; foreign students working on OPT are not entitled to both Social Security and Medicare. If the law was passed, students would be paying hundreds of dollars towards services they cannot avail.
Speaking with Deccan Chronicle, a Hyderabad-based student working in California on OPT, who was aggravated about the removal of exemptions, said “The worst part with the OPT Fair Tax Act is, us OPT workers don’t get social security or medicare! If it is passed, which it most likely will be, we would essentially be paying money from our pockets to things we can’t get. How is it fair?”
“We would lose 7.65 per cent of our hard-earned money towards medicare and social security of somebody else. This is not a simple act of choosing Americans over foreign workers, they literally want to see us go bankrupt”, the student said.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: deccanchronicle.com
