Written by: Stephen Rogers | Oct 08, 2026

For decades, American companies have been told that globalization means going wherever the talent is cheapest, the supply chain is most efficient, or the spreadsheet looks happiest. Senator Bernie Moreno has a different suggestion: if a company wants to send work overseas, perhaps the federal government should make it considerably more expensive.

That is the idea behind October’s IssueVoter Bill of the Month, the HIRE Act, S. 2976, formally the Halting International Relocation of Employment Act. Introduced by Senator Bernie Moreno of Ohio, the proposal would impose a 25 percent excise tax on certain payments American businesses make to foreign companies and workers for services that ultimately benefit U.S. consumers. On top of that, businesses would no longer be allowed to deduct those outsourcing payments from their taxable income.

The theory is refreshingly uncomplicated: make offshore labor less financially attractive, make American workers relatively more competitive, and use the money raised to train more Americans for the jobs companies say they cannot fill domestically.

Whether the economics are quite so uncomplicated is another matter.

What would the HIRE Act actually do?

The bill defines an “outsourcing payment” broadly. It can include a fee, royalty, service charge, premium, or other payment made by a U.S. person or business to a foreign person for labor or services that directly or indirectly benefit American consumers. The company making that payment would owe an excise tax equal to 25 percent of its value.

At the same time, the payment itself would cease to be deductible for federal income-tax purposes. Ordinarily, businesses can deduct legitimate operating expenses from revenue when calculating taxable profit. Under the HIRE Act, qualifying overseas service costs would effectively be treated differently from equivalent domestic costs.

There are also reporting requirements and penalties intended to stop businesses from simply rearranging transactions through subsidiaries or intermediaries to avoid the tax. Revenue collected through the tax and associated penalties would flow into a new Domestic Workforce Fund. That money could finance Department of Labor retraining programs, apprenticeships, industry partnerships, and grants to states dealing with significant job displacement.

As the IssueVoter analysis puts it, the fundamental question is straightforward: should Congress impose a new tax on outsourced labor?

Why supporters think the answer is yes

Moreno’s argument begins with something that has frustrated American workers for years. Companies can substantially reduce labor costs by moving functions such as customer support, software development, accounting, data processing, and back-office administration overseas. The savings can be enormous, particularly when American wages are compared with those in India, the Philippines, Latin America, or Eastern Europe.

Moreno argues that the result has been a system in which companies enjoy the benefits of selling into the enormous U.S. consumer market while facing a financial incentive to employ workers somewhere else. In promoting the legislation, he accused corporations of shipping good-paying jobs overseas in pursuit of lower wages and higher profits, arguing that companies choosing foreign workers over Americans should face a financial consequence.

Charter Communications has endorsed the proposal, saying that its U.S.-based workforce is central to the quality of the service it provides and praising legislation that recognizes the value of keeping jobs onshore.

There is also an appealing circularity to the bill. Rather than simply collecting a tax on outsourcing and allowing the money to disappear into the federal budget, the HIRE Act would direct the proceeds toward training American workers. In principle, overseas outsourcing would fund the workforce development intended to make outsourcing less necessary.

Supporters might also argue that the tax code is never completely neutral anyway. Governments routinely use tax incentives and penalties to encourage particular kinds of economic behavior. If lawmakers provide credits for domestic manufacturing, clean-energy investment, research, or apprenticeship programs, imposing a tax disadvantage on offshore labor is not an entirely alien concept.

The political appeal is obvious. “American jobs for American workers” works rather better on a bumper sticker than “international optimization of cross-border service inputs.”

Why opponents think the cure could be worse than the disease

Critics argue that the HIRE Act treats modern global businesses as though outsourcing were simply a matter of replacing an American employee with a cheaper foreign one. Often it is more complicated.

American companies routinely buy overseas software development, legal advice, consulting, design work, cloud services, engineering, intellectual property, technical support, and other specialist services. Some work might otherwise have been performed by American employees. Some might never have existed in the United States at all.

Alan Cole of the Tax Foundation argues that the proposal could produce multiple layers of taxation on perfectly legitimate international business activity. Because the overseas payment would both attract a 25 percent excise tax and lose its normal business deduction, the effective increase in cost could substantially exceed 25 percent.

There is also the small matter of deciding exactly which foreign work “benefits” an American consumer. Imagine an American software company employing a team in Poland to maintain a global platform used by customers in 40 countries. What proportion of those engineers' salaries relates to American consumers? What happens when the same code is used simultaneously by customers in Ohio, Germany, Japan, and Brazil?

The legislation anticipates this problem by allowing payments to be allocated between U.S. and foreign consumption and by directing the Treasury Department to write anti-avoidance rules. But that means the apparently simple “25 percent tax on outsourcing” could become a decidedly complicated exercise in international tax accounting.

Opponents also warn about competitiveness. The United States is not merely an importer of services. It is an extraordinarily successful exporter of them. In 2025, U.S. exports of services exceeded $1.2 trillion, considerably more than the country imported, leaving the United States with a large services trade surplus

That matters because international services trade cuts both ways. American consulting firms, technology companies, financial businesses, entertainment companies, and professional-service providers benefit enormously from being able to sell their expertise overseas. Critics worry that heavily taxing imported services could invite other countries to adopt similar taxes against American service exports. What looks domestically like a tax on outsourcing can look internationally rather like protectionism.

Could the tax actually bring jobs home?

That is the $25-percent question. For some jobs, probably. If the cost difference between an American and an overseas worker is relatively modest, the excise tax plus the loss of the deduction could change the calculation. A company considering whether to place a call center in Ohio or overseas might suddenly find Ohio considerably more competitive.

But outsourcing decisions are not always driven entirely by wages. Companies use foreign workers because of specialist skills, time-zone coverage, access to growing markets, shortages of domestic workers, or the fact that their operations are genuinely international. A tax cannot necessarily create a cybersecurity engineer, semiconductor specialist, or multilingual support team in the United States simply by making the overseas version more expensive.

Businesses could also respond in ways Congress does not intend. Some might raise prices. Some might automate work instead of bringing it home. Others could restructure corporate operations so the relevant services are purchased by foreign affiliates rather than U.S. entities. And, in the most extreme case, critics such as the Tax Foundation warn that adding substantial costs specifically to U.S.-resident companies could encourage businesses to place more activities — or even their corporate headquarters — outside the United States.

The HIRE Act is therefore something of an economic experiment. It assumes that increasing the cost of foreign labor will redirect demand toward American labor. The unanswered question is how much demand would instead move somewhere else entirely.

The politics: popular idea, difficult legislation

S. 2976 was introduced on October 6, 2025 and referred to the Senate Finance Committee. It has not subsequently received a committee vote and currently has no Senate cosponsors.

There has, however, been one significant development since its introduction. A House companion, H.R. 7559, was introduced on February 12, 2026 and referred to the House Ways and Means Committee. Neither chamber has yet voted on the proposal. The existence of companion legislation gives the idea a foothold in both chambers, but that should not be confused with momentum toward enactment. A major change to international business taxation would normally require detailed committee scrutiny, revenue estimates, considerable lobbying, and probably significant revisions before reaching either chamber floor.

And lobbying interest is certainly appearing. Federal lobbying disclosures also show that the bill has caught corporate attention. Through September 2026, 31 lobbying reports naming S. 2976 had been filed on behalf of 11 clients, involving 42 registered lobbyists. Organizations appearing in those disclosures include Charter Communications, the Business Software Alliance, the American Council of Life Insurers, and the National Association of Software and Service Companies.

That does not tell us whether each organization supports or opposes the bill. It does tell us that businesses are paying attention.

Outsourcing, but with a price tag

The HIRE Act gets at a genuine tension in the modern economy. American consumers benefit from global services because they can make products cheaper, companies more efficient, and expertise available from almost anywhere. American companies also benefit enormously from selling their own services around the world.

At the same time, those benefits are rather abstract if the job being made “more efficient” happens to be yours. Moreno's bill offers an unusually direct answer: if access to the American market makes offshore labor profitable, Congress should alter the calculation so employing Americans becomes more attractive.

Supporters see a long-overdue correction to a system that rewards companies for moving work abroad. Opponents see a blunt tax on international commerce that could raise costs, create an administrative thicket, and ultimately make American companies less competitive. Both arguments deserve more than the usual slogans about greedy corporations or unrestricted free trade. Because beneath the tax provisions, the HIRE Act asks a much bigger question: how far should government go to make businesses choose American workers?