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The time bomb in the tax code that's fueling mass tech layoffs

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Re: The time bomb in the tax code that's fueling mass tech layoffs

#321

Post by dragonwriter »

jandrewrogers wrote: post #309
lesuorac wrote: post #252

Earlier quoted context omitted.

imo, it's in the best interest of the market for people to have to realize their gains otherwise the price of an item is pretty imaginary if it's never realized.

Gains are frequently not realizable as a matter of law and/or contract, for good reason. Additionally, there are many assets with notional value conditional on not liquidating them, which makes them de facto not realizable. And of course, the majority of assets have no liquidity, so realizability is a practical fiction. The unrealized values are a fiction. There is significant value in treating values as unknowable w…

> The unrealized values are a fiction.

Then instead of taxing the gains, you'd accept the government nationalizing the assets by eminent domain and paying fair compensation that was significantly less than the "fictional" unrealized value?

Or if someone unlawfully deprived you of the asset, you'd accept as restitution or seek as civil damages for the loss something significantly less than the "fictional" value?

Or, when it was no longer an excuse to avoid fair taxation, would that "fiction" suddenly be a lot more real to you?

Re: The time bomb in the tax code that's fueling mass tech layoffs

#322

Post by dang »

dmoy wrote: post #76
dang wrote: post #25

Related. Others? The time bomb in the tax code that's fueling mass tech layoffs - https://news.ycombinator.com/item?id=44180533 - June 2025 (927 comments) ( Big Beautiful Bill R&D Tax: Will tech go on a hiring spree again? - https://news.ycombinator.com/item?id=44028106 - May 2025 (19 comments) The Consequences of Limiting the Tax Deductibility of R&D - https://news.ycombinator.com/item?id=43639202 - April 2025 (64 c…

Not a big thread, but a layoff one from a year ago: https://news.ycombinator.com/item?id=38633668

Added. Thanks!

Re: The time bomb in the tax code that's fueling mass tech layoffs

#323

Post by latency-guy2 »

beezle wrote: post #109

Bloomstink has a short article on R&D expenses/tax credits as does Reuters on some of the back and current history. But just as an accounting note: R&D expense has nothing to do with the company having revenues for an existing product, which already is allowed to deduct cost of goods sold, selling and admin expense. It is a cost related to future business and in that regard, it is not crazy to say it should be amorti…

What is "Bloomstink"? Neither of your links references it, there are no references to the thing that makes sense when I do a web search.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#324

Post by sylens »

jmyeet wrote: post #144
khuey wrote: post #111

Earlier quoted context omitted.

Things can have more than one cause. Even the article only claims this change "has contributed to the loss".

Yes. And I reject that claim. Big tech companies are both doing mass layoffs AND hiring. How does this fit the narrative that the tax change is at least in part responsible? The new hires still have the same deduction issue, right? So what impact does this really have? Think of it this way: if this passes, will the layoffs end? Or reduce? Absolutely not. All this does is give line the pockets of shareholders. That's…

Things wouldn’t be called layoffs then, people would just be aggressively PIPed out

Re: The time bomb in the tax code that's fueling mass tech layoffs

#325

Post by kevinventullo »

offnominal wrote: post #201
layer8 wrote: post #185

As a non-American, it seems strange to me that the cost of regular software development, i.e. that is neither “research” nor “experimental” in a conventional sense, would be deductible in the first place (amortized or not). Isn’t that subsidizing a whole business sector? Maybe I’m misunderstanding something.

Salaries in general (not just of software developers) are tax deductible in many countries. This is desirable because we do not want companies to be paying taxes on revenue.

I dunno, I pay taxes on revenue.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#326

Post by glompers »

tomrod wrote: post #306
SpicyLemonZest wrote: post #234

Earlier quoted context omitted.

Providing spoilers was the explicitly designed purpose of the US Senate. It's not a one-sided problem - Senate spoilers are also why the Affordable Care Act didn't get repealed in 2017.

Explicitly?

US Senator was an office initially designed to be selected by state legislatures rather than by direct popular election like the representatives. To a populist or a party boss, that might count as a spoiler to the will of the people or to the will of those in DC, or to both. But I may misinterpret GP's point.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#327

Post by candiddevmike »

dragonwriter wrote: post #282
cibyr wrote: post #280

Earlier quoted context omitted.

It's so depressing to hear that congress can't even do small things that everyone agrees upon.

If everyone agreed on it, Congress would have no problem doing it (Congress itself, after all, is a subset of "everyone".)

A highly disproportional subset of everyone, maybe. Though uncapping the house wouldn't fix the Senate (maybe adding some more states would)

Re: The time bomb in the tax code that's fueling mass tech layoffs

#328

Post by dboreham »

tomrod wrote: post #306
SpicyLemonZest wrote: post #234

Earlier quoted context omitted.

Providing spoilers was the explicitly designed purpose of the US Senate. It's not a one-sided problem - Senate spoilers are also why the Affordable Care Act didn't get repealed in 2017.

Explicitly?

Not parent but the founders were like folks writing smart contract code, thinking about various exploits and vulnerabilities (that might reduce the wealth of their class) so many of the seemingly dysfunctional elements of the system turn out to be designed deliberately to be dysfunctional. Feature not bug.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#329

Post by _heimdall »

radley wrote: post #132
demosthanos wrote: post #96

There are some misunderstandings in the comments that seem to stem from not having read the section, so I thought it was worth referencing the actual text [0]. It's quite short and easy to read. The most important bits: * Subsection (a) requires amortizing "Specified research or experimental expenditures" over 5 years (paragraph (2)) instead of deducting them (paragraph (1)) * Paragraph (c)(3) is a Special Rule that…

It's not really targeted at tech, insomuch as at Democrats. Everyone assumed it was a traditional accounting hack. But given the timing and the reinitialization, it's clearly political, not economic. The code is a strategic time-bomb designed to cause a high-profile economic downturn during a presidential election cycle, specifically when the following president is a Democrat and Republicans have a house majority. It…

If this was passed in 2017 to go into effect during the next presidential term, wouldn't that only work as a time bomb for Biden's presidency if Trump didn't expect to win a second consecutive term?

Given the history of prior presidents winning 2 consecutive terms, it seems like Trump could have reasonably expected a 2022/2023 tax change to be his problem.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#330

Post by triceratops »

gruez wrote: post #143
MattPalmer1086 wrote: post #136

Earlier quoted context omitted.

Wait - they are saying that employee salaries are not expenses? That is surely wrong? Just because those salaries are for R&D? I could understand if there was some additional tax break for R&D which was being removed. I can't see how basic operating costs cease to be expenses.

>Wait - they are saying that employee salaries are not expenses? >That is surely wrong? Just because those salaries are for R&D? The same would be true if you hired a bunch of scientists/engineers and got them to do R&D.

Would it also be true if you hired a bunch of construction workers and got them to build a stadium?
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