How on earth is this going to defined and enforced? Isn't anything and everything shipped from overseas to the US, physically or electronically, "benefiting US consumers"?

Update: Here's the full text of the bill.

https://www.taxnotes.com/research/federal/legislative-docume...

And the definition is:

The term 'outsourcing payment' means any premium, fee, royalty, service charge, or other payment made —

“(A) in the course of a trade or business,

“(B) to a foreign person, and

“(C) with respect to labor or services the benefit of which is directed, directly or indirectly, to consumers located in the United States.

...

(c) FOREIGN PERSON. — For purposes of this section, the term 'foreign person' means any person who is not a United States person, except that such term shall not include any corporation or partnership which is organized under the laws of a possession of the United States.

Note that goods are excluded, which is the only sliver of sanity in this whole thing, although it's also a loophole big enough to drive a truck through: if I get my favorite Indian outsourcing company to build me a Web app and ship it by USB drive, did I just avoid the tax?

In any case, enforcement will be by requiring everybody who files tax returns to self-report under threat of perjury:

c) REPORTING. — The Secretary of the Treasury, or the Secretary's delegate, may —

(1) require United States persons making payments to foreign persons (as defined in section 5000E of the Internal Revenue Code of 1986, as added by subsection (a)) to file a return of tax under section 5000E of such Code or to file an information return concerning such payments, which may include —

(A) information on whether such payments are outsourcing payments (as defined in section 5000E of such Code), and

(B) such other information concerning such payment as the Secretary may reasonably require to enforce the amendments made by this section, and

(2) require the officers of any corporation to certify on such return, under penalty of perjury, the character of such payments.

- 25% is not enough to matter if you drop from 130k US engineer to a 40-50k outsourced

- International corporation will easily side step that since the US Corp is not paying for salaries to the foreign Corp, just dues to exploit the IP at best

So at best this would be hurtful to smaller businesses like the stupid section 174.

Again, we get takers, but they can't match the skill level of overseas devs at double the salary.

Will we pay the 20% tax/fine? Grudgingly yes. Particularly if this stuff becomes law and local labor force becomes even more expensive than it is now.

I can also see people coming up with creative ways to circumvent having to pay the tax. It is possible that some companies will move out entirely or create a legally separate entity offshore that is responsible for all the work that they wish to outsource.

The same sort of thing happened with manufacturing jobs. You can wish for those jobs to come back all you want. It is not happening in any significant numbers.