US proposes 25% tax on firms hiring foreign workers

US lawmakers have unveiled legislation that would levy a 25% tax on companies outsourcing work abroad, escalating efforts to discourage reliance on foreign labour and protect domestic jobs.

The measure, introduced by Senator Bernie Moreno of Ohio, is called the Halting International Relocation of Employment Act, or the HIRE Act. According to Reuters, the bill proposes an excise tax on payments made by US firms to foreign workers if their services ultimately benefit consumers in the United States.

The tax, set at 25%, would apply to outsourcing payments beginning after 31 December 2025. These payments, as defined in the bill, include any funds transferred to overseas individuals or entities performing work that could otherwise be done by US-based employees.

Moreno said the goal is to prevent corporations from chasing lower wages overseas at the expense of American workers. “While college grads in America struggle to find work, globalist politicians and C-Suite executives have spent decades shipping good-paying jobs overseas in pursuit of slave wages and immense profits – those days are over,” the senator stated in announcing the bill.

Funding workforce development

The legislation proposes that revenue raised from the new tax would flow into a “Domestic Workforce Fund.” According to the Wall Street Journal, this fund would finance apprenticeships, retraining initiatives and other programmes designed to bolster the US labour market.

A notable feature of the bill is that outsourcing payments would not be treated as deductible expenses, effectively increasing the financial burden on companies that choose to send work offshore. The measure also proposes to tax the earnings of international students working under the Optional Practical Training (OPT) programme, who are currently exempt from paying payroll taxes such as Social Security and Medicare.

Rising pressure on foreign labour

The proposal comes amid a series of US policy shifts aimed at limiting companies’ use of foreign workers. The Biden administration has tightened rules around H-1B visas, while the Department of Homeland Security recently moved to end visa interview waivers for many students and skilled workers.

The introduction of the HIRE Act reflects intensifying political scrutiny of offshoring in an election cycle where jobs and wages are at the forefront of debate. Populist lawmakers in both parties have criticised large corporations for pursuing profit margins abroad while US workers face stagnant pay and reduced opportunities.

Moreno, who has positioned himself as a defender of working-class Americans, framed the bill as an overdue correction. “It’s time to fight for working-class Americans and ensure they can work and retire with dignity. If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks,” he said.