The HIRE Act: 25% tax on outsourcing(moreno.senate.gov)
moreno.senate.gov
The HIRE Act: 25% tax on outsourcing
https://www.moreno.senate.gov/press-releases/new-moreno-bill-would-crack-down-on-outsourcing-fund-american-workers/
19 comments
payroll taxes on remote work, it’s about time. market is not going to like it though. tarrif wars 2 !
There they go making things more expensive in Walmart again…
How does impairing the economics of offshoring knowledge work impact Walmart goods pricing?
Walmart years back tried a buy USA push. Lower prices outside the us, due to lower wages, less regulations, …. Didn’t last long. If people really want in country products, they’ll just have to pay more. Companies aren’t going to make less.
Again, this is about outsourcing knowledge work and labor, not goods you can tariff. With regards to your Walmart assertion, more than two-thirds of Walmart U.S. total product spend in FY2024 was on items their suppliers reported were made, grown, or assembled in the United States [1] (per Walmart).
[1] https://corporate.walmart.com/suppliers/investing-in-america...
[1] https://corporate.walmart.com/suppliers/investing-in-america...
I respectfully think you overestimate the impact this will have.
Like with the H1-B cap discussions there were murmurs about some time back (Not actually reducing the cap, but instead priority-weighting it by salary instead of difficulty to fill the position, something that'd actually _hurt_ US workers in the positions they can actually compete and be paid well for) this change feels a lot more like a performative money grab than something that will actually change the economics.
Indian headcount is not 25% cheaper for the roles I've seen it used for. It is integer-N cheaper, where N can sometimes be >3-5. Additionally, there simply is not the functional, social, or business infrastructure to spin up a new 10k person business center overnight in the US, meaning that for many use cases even if individual labor is findable, it's not realistic in the same respect.
If anything my fear (and what I've observed thus far) is that businesses will see overseas staffing as critical enough that the cuts will come out of the highest cost center: US employment.
Like with the H1-B cap discussions there were murmurs about some time back (Not actually reducing the cap, but instead priority-weighting it by salary instead of difficulty to fill the position, something that'd actually _hurt_ US workers in the positions they can actually compete and be paid well for) this change feels a lot more like a performative money grab than something that will actually change the economics.
Indian headcount is not 25% cheaper for the roles I've seen it used for. It is integer-N cheaper, where N can sometimes be >3-5. Additionally, there simply is not the functional, social, or business infrastructure to spin up a new 10k person business center overnight in the US, meaning that for many use cases even if individual labor is findable, it's not realistic in the same respect.
If anything my fear (and what I've observed thus far) is that businesses will see overseas staffing as critical enough that the cuts will come out of the highest cost center: US employment.
We can try it and see what happens. If the results are suboptimal, the taxes on offshoring can be cranked up. In theory, corporations are forced to operate in a market governed by voters and their representatives, and the resulting policy. We expect citizens to follow laws, why not companies? Why would they get a free pass to evade the spirit of the law (out of “cost efficiency” and shareholder profits)? Keep the corporate labor spend in the country or make the business suffer economically.
Companies can hire remote domestically, the talent exists in the US. There is no need to spin up hubs for thousands of people to drive to offices to Zoom from. If you want access to the market, you can hire in the market.
Companies can hire remote domestically, the talent exists in the US. There is no need to spin up hubs for thousands of people to drive to offices to Zoom from. If you want access to the market, you can hire in the market.
While "try it and see what happens" may work for low-risk efforts, the costs and chaos associated with this in a system as complex as global employment seems eminently short-sighted. We've already seen how "Try it and see what happens" works for tariffs, have we not?
To your point of cranking it up, I argue that there simply is not a clearing cost that makes US labor viable for many of these positions in the modern world without effectively rendering that service non-viable or dropping US worker purchasing power by a similar multiplier to the salary gap.
In that respect, last I heard, voters and representatives were _viscerally_ opposed to anything that sounded like "Degrowth" which would be the practical outcome of such a policy. (Not making a personal statement here beyond addressing your theory)
In short, my thesis is that if we really want to fix the offshoring issue, there are fundamentally more significant issues that need to be addressed, and absent fixing those, we're only harming ourselves.
Edit: your parent post substantially changed in between my response and now, so I'll address it as currently stands as well:
I'm not sure where "spirit of the law" comes in vs. being a convenient phrase for whatever is being advocated for. I've seen it used innumerably on this very site to defend pushback against worker protections for the last decade in defense of duty to shareholders, certainly.
There is no law that dictates fiscal decisions without regard for practical outcome; that's just bad policy. We appear to not even expect our executive to follow laws at this moment, so the rest of your statement seems to be even more of a non-sequitur. The business-as-a-conceptual-entity will not "suffer" as it's not a human being as much as we'd like the schadenfreude. While it may take a hit in revenue, it has the ability to act globally, it has the ability to shift costs, individuals do not have nearly as much ability to arbitrage, and often have their hands forced. (Look at how UPS is dramatically raising their fees, and will likely profit substantially despite reduced volume. Who is hurting there, the business or the people?)
I'm also not sure what your statement about zoom is in respect to; these business centers are often self-contained entire LOB or call center vs. working across borders. Just on a basis of population, companies like india can provide services that are not realistic for the US , and we are now taxing ourselves for needing to take advantage of that in a globally competitive environment.
(It feels weird to be arguing this since I'm largely pro-supporting-local-labor-markets, and extremely pro-labor broadly, but frankly this is just counterproductive legislation and not the way to go about it. We need to lean on our comparative advantages, not cut off our hand to spite our face.
To make this even more explicit with an example: I would not have this argument were the legislation targeted at specific tactical sectors where the US currently has a meaningful moat or margin, and were an all-out ban against offshoring within those sectors alongside concrete measures to support onshoring, vs. a tactlessly-broad half-measure.)
To your point of cranking it up, I argue that there simply is not a clearing cost that makes US labor viable for many of these positions in the modern world without effectively rendering that service non-viable or dropping US worker purchasing power by a similar multiplier to the salary gap.
In that respect, last I heard, voters and representatives were _viscerally_ opposed to anything that sounded like "Degrowth" which would be the practical outcome of such a policy. (Not making a personal statement here beyond addressing your theory)
In short, my thesis is that if we really want to fix the offshoring issue, there are fundamentally more significant issues that need to be addressed, and absent fixing those, we're only harming ourselves.
Edit: your parent post substantially changed in between my response and now, so I'll address it as currently stands as well:
I'm not sure where "spirit of the law" comes in vs. being a convenient phrase for whatever is being advocated for. I've seen it used innumerably on this very site to defend pushback against worker protections for the last decade in defense of duty to shareholders, certainly.
There is no law that dictates fiscal decisions without regard for practical outcome; that's just bad policy. We appear to not even expect our executive to follow laws at this moment, so the rest of your statement seems to be even more of a non-sequitur. The business-as-a-conceptual-entity will not "suffer" as it's not a human being as much as we'd like the schadenfreude. While it may take a hit in revenue, it has the ability to act globally, it has the ability to shift costs, individuals do not have nearly as much ability to arbitrage, and often have their hands forced. (Look at how UPS is dramatically raising their fees, and will likely profit substantially despite reduced volume. Who is hurting there, the business or the people?)
I'm also not sure what your statement about zoom is in respect to; these business centers are often self-contained entire LOB or call center vs. working across borders. Just on a basis of population, companies like india can provide services that are not realistic for the US , and we are now taxing ourselves for needing to take advantage of that in a globally competitive environment.
(It feels weird to be arguing this since I'm largely pro-supporting-local-labor-markets, and extremely pro-labor broadly, but frankly this is just counterproductive legislation and not the way to go about it. We need to lean on our comparative advantages, not cut off our hand to spite our face.
To make this even more explicit with an example: I would not have this argument were the legislation targeted at specific tactical sectors where the US currently has a meaningful moat or margin, and were an all-out ban against offshoring within those sectors alongside concrete measures to support onshoring, vs. a tactlessly-broad half-measure.)
I will take this into account when I provide expertise to policymakers.
While tone on the internet admittedly makes it hard to tell if your comment was tongue-in-cheek, I'm going to take this in good faith and express my appreciation that you even read through that entire ramble above :)
My comment was genuine, and I read every reply in their entirety. I also reference them as citations in my notes in some cases, such as your comment. I appreciate the discourse.
I've appreciated reading your posts broadly/for years prior to this as well, so definitely same statement back your way. If you're ever in the PNW, beers/coffee is on me.
I appreciate it, I’ll be in touch, looking forward to the conversation.
Checked. My bottles don’t say where they were manufactured. That location can be different than the name of the manufacturer. I’m interested in where they’re made, not whether they are using an outsourcing us generic maker.
The upside, in theory, should be more money flowing around
While I understand the rationale, is there enough talent in US to make up for the theoretical additional demand this can generate?
Absolutely. After the “Great Resignation,” where labor was tight and wages were pushed up, there was a large push in both tech and financial services to stand up offshoring operations in Chennai and Hyderabad (India), Manila (Philippines), and LATAM (primarily Mexico City, but also parts of South America) in order to avoid hiring US workers.
As others have mentioned in this thread, simply look at the unemployment rate and time to find a job for these workers. The labor force exists, companies just don’t want to pay for it or offer flexible work (RTO, which is also used to cram down labor costs). They want the control back.
As others have mentioned in this thread, simply look at the unemployment rate and time to find a job for these workers. The labor force exists, companies just don’t want to pay for it or offer flexible work (RTO, which is also used to cram down labor costs). They want the control back.
Yes, there are many people in the US looking for jobs.
Referring to software and hardware talent, which are the biggest target for this