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 full analysis lists 5 implications of this text.
Who stands to gain
domestic labor and workforce development contractors; state workforce agencies; apprenticeship programs and industry partnerships