Congress taxes outsourcing, dedicates revenue to worker retraining
S. 2976 — HIRE Act · Filed by Bernie Moreno (R-OH) · Introduced Oct 6, 2025 · Referred to committee
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What it does
This bill imposes a 25% federal excise tax on payments made by U.S. businesses to foreign persons for services that benefit U.S. consumers—a direct tax on outsourcing. The bill also denies U.S. companies a tax deduction for these outsourcing payments, and dedicates all revenue to a new Domestic Workforce Fund for retraining, apprenticeships, and state workforce development programs. The tax applies to any payment for labor or services directed to U.S. consumers, effective January 1, 2026.
Why we flagged it
The bill's core mechanism is a punitive excise tax on outsourcing paired with a mandatory revenue dedication to domestic workforce programs. It is functionally protectionist industrial policy, not a simple tax measure, and explicitly ties revenue to labor-market intervention.
What the text implies
- The 25% excise tax may be passed through to U.S. consumers as higher prices for outsourced services (cloud computing, customer support, software development, etc.), creating a regressive cost borne disproportionately by lower-income households.
- The bill's definition of 'outsourcing payment' is broad and may capture legitimate cross-border business services (e.g., software licensing, consulting, data processing) not traditionally viewed as 'outsourcing,' expanding the tax base beyond manufacturing and call-center labor.
- The Domestic Workforce Fund is mandatory and non-discretionary, but its effectiveness depends on Department of Labor implementation and state uptake—no enforcement mechanism or performance metrics are specified, creating execution risk.
- The denial of tax deduction (Section 280I) compounds the excise tax, creating a 25% + marginal-rate tax burden on outsourcing payments, potentially exceeding 40% for high-bracket corporations and creating strong incentive to relocate operations or restructure supply chains.
- The bill's anti-avoidance language (related parties, transfer pricing, controlled foreign corporations) signals intent to close loopholes, but the Secretary's regulatory authority is broad and undefined, creating compliance uncertainty for multinational firms.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
The bill creates a concrete public benefit—a dedicated revenue stream for workforce retraining and job displacement assistance—but imposes a significant cost on U.S. consumers through higher prices for outsourced services, and may reduce business investment and competitiveness. The net effect on ordinary workers depends on whether retraining programs offset job losses and whether price increases outweigh wage support.
Who stands to gain
- domestic labor and workforce development contractors
- state workforce agencies
- apprenticeship programs and industry partnerships
- U.S.-based service providers (competing with offshore alternatives)
Named in the bill
Internal Revenue Service, Department of Labor, U.S. Treasury, Foreign persons (non-U.S. entities), U.S. corporations and partnerships, Controlled foreign corporations, State workforce agencies
Where it stands
- Oct 6, 2025 — Introduced · Congress.gov: “Introduced in Senate”
- Oct 6, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
8 lobbying clients named this bill on 11 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $5,385,837 in lobbying spend. A filing names 6 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 88% of bills with at least one filing.
Bernie Moreno, the sponsor, reported $285,000 in PAC receipts in the 2026 cycle.
- American Council of Life Insurers — $4,085,837 on 3 filings
- Synchrony Financial — $430,000 on 1 filing
- Business Software Alliance — $320,000 on 1 filing
- Tax Reform Coalition — $250,000 on 1 filing
- National Association of Software and Service Companies — $120,000 on 2 filings
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (6,313 characters) on Aug 20, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-20.
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