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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

#371

Post by MoonGhost »

mountainriver wrote: post #258
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…

This is one of the worst things MAGA has done. Tech startups are the source of so much of our wealth, and this makes it very challenging to ever build one. I can’t believe this still exists, and no one has changed it. We truly are governed by morons

[flagged]

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

#372

Post by runako »

jmpetroske wrote: post #332
runako wrote: post #303

Earlier quoted context omitted.

Just last year, Congress snapped to attention and wrote and quickly passed a bill to ban the eminent national security threat of a video-sharing app. That bill doesn't do anything else. Just a reminder that Congress, even now, can rapidly act on a laser focus when it is sufficiently motivated.

Is the TikTok debacle not a way higher profile case?

Did it have a larger financial impact than the tax code issue being discussed here? Absolutely not.

It was higher profile because Congress decided it should be higher profile.

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

#373

Post by Spivak »

shepherdjerred wrote: post #366
yieldcrv wrote: post #270

Earlier quoted context omitted.

This bill is goated for upper middle class and tech and defense sector And I’m tired of pretending like we aren’t going to be beneficiaries Every Congress increases the debt, we can acknowledge that the cuts they picked are going to wreck the lower class especially with the medicaid, we can acknowledge that it won’t meet its goals of cuts but are you guys just scared to acknowledge its going to super charge things th…

I don’t have to be in support of something just because it benefits me

In fact condemning something despite the fact that it would benefit you personally ought to be considered noble.

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

#374

Post by hackernoops »

timewizard wrote: post #154
sampton wrote: post #133

Amortization is bad policy when it comes software. Software is inherently high risk. Every piece of software is unique and does not guarantee steady income over 5 years. Most startups won't survive 5 years to fully realize the deductions. This is the end of US software dominance.

Is US software dominance because of our startups? Or because of the giant trillion dollar monopolies we have? Didn't AAPL, GOOG and FB all create products _before_ they had any taxable income? Would this change have had any actual impact on their foundings?

It started with small and nimble innovators. Then it was shifted to Big Tech with the squeeze of patent trolling in the 2000's applied. It was capturing massive created value into the hands of few, connected, corrupt shitbags.

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

#375

Post by rezonant »

kenjackson wrote: post #348
candiddevmike wrote: post #219

Earlier quoted context omitted.

As a progressive, it seems like the Democrats always have Senate spoilers...

But this is the type of thing that progressives would like support (tax big corporate America).

No, this is a misunderstanding of the kind of taxation policy progressives tend to favor. Taxation on profit for businesses should be high, and taxation on upper tiers of individual income should be high, but taxation on funds businesses use to reinvest should be exempted or deductable. Basically the taxation we had in place after WW2 and on, with a steep corporate tax rate and more or less a maximum income for individuals. The R&D exemption removed in the 2017 bill, and discussed in the article, is key to that, because it encourages corporations to reinvest their income in building new products and paying workers rather than taking it directly as profit-- after all, at least they could reap the rewards (in growth and revenue) of the R&D later, instead of just giving the money to the government as taxes.

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

#376

Post by _heimdall »

adgjlsfhk1 wrote: post #363
_heimdall wrote: post #329

Earlier quoted context omitted.

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.

if you retain power, you can fix it. the US government currently has the significant problem that one party campaigns on the government being dysfunctional, so they do their best to make it so.

But what would trump have done if he retained the presidency and lost congress? That's also been pretty common over the last few decades if I'm mistaken, a president with one or both sides of Congress is reelected but Congress flips to the opposition party.

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

#377

Post by Spivak »

bravesoul2 wrote: post #239
simantel wrote: post #195

Earlier quoted context omitted.

Businesses are taxed on profits, not revenue. Paying people to write code is an expense, so you'd normally deduct that expense (plus all your other expenses) from your revenue to arrive at an amount that should be taxed.

That's the rub. Is it an operational expense, like rent or a capital expense, like buying machinery? It is sort of between the two in my view and is highly dependant on what the software engineer does each day. Are they fixing a bug, helping a customer, refactoring? I think that is operational. Are they building out a new feature? That is capital. But it is not quite like buying equipment because it adds no value to…

The answer is that it's an operational experience when it's a salaried employee and a capital expense when it's a contractor. Like not in a theoretical sense, this is how it's classified right now.

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

#378

Post by beezle »

cake_robot wrote: post #241
luckylion wrote: post #230

Earlier quoted context omitted.

The chef doesn't create a meal once that you can sell for the next 10 years though. You pay him for time X, he makes a meal, you sell that meal. That's fundamentally different from regular software development outside of agencies where there is no direct relationship. Software development is closer to an investment than an expense. Amortization sucks in general, yes, because the money is gone and it doesn't affect yo…

When someone pays for labor to build an apartment building they profit off for decades, do they amortize that labor?

That is production, not R&D. Basic research into, for instance, semiconductors may one day lead to the production of a new product. The R&D costs would be amortized, the eventual production costs would not.

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

#380

Post by _heimdall »

kenjackson wrote: post #349
_heimdall wrote: post #329

Earlier quoted context omitted.

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.

No. It’s after re-election. Bad news late in your second term isn’t that big of a deal, unless you care about legacy.

Most presidents care about legacy, at least to me it seems like trump holds that as a higher priority than most.
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