H.R. 995: No Tax Breaks for Outsourcing Act

H.R. 995, the No Tax Breaks for Outsourcing Act, is a broad rewrite of how the U.S. taxes profits earned by foreign subsidiaries of American multinationals. Its core move is simple: it would tax more of those foreign profits currently, instead of letting companies subtract a deemed return on overseas tangible assets before calculating the tax. In plain English, it tightens the rules so companies cannot as easily lower their U.S. taxes by putting income in low-tax foreign affiliates.

The bill also shifts the system toward a country-by-country approach. That matters because current rules can let companies blend high-tax and low-tax foreign income together, reducing the overall U.S. tax they owe. By requiring separate calculations by country, the bill aims to make it harder to use profits in one place to shield profits in another place with a very low tax rate.

Another major piece repeals section 250, which currently gives special deductions tied to foreign income, including the reduced rate on GILTI and the deduction for foreign-derived intangible income. Removing that deduction would raise the effective tax rate on certain offshore profits and end a tax preference that supporters argue rewards firms for locating valuable intellectual property and reported earnings outside the U.S. The bill text also points to tougher rules on interest deductions, corporate inversions, and foreign corporations managed and controlled from the United States, though the excerpt provided does not include those later sections in full.

Politically, the bill is a clear message bill with serious support inside the Democratic caucus, given its 134 cosponsors. But it would face strong resistance from multinational business groups that argue these changes could make U.S.-based companies less competitive against foreign rivals. The practical effect, if enacted, would likely be higher taxes and more complex compliance for large multinationals with cross-border structures, alongside more revenue and fewer incentives to book profits offshore.