Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

qz.com

Post reply on HN
Print view View original

421–430 of 991 posts

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

#421

Post by Supermancho »

tomrod wrote: post #387
Supermancho wrote: post #290

Earlier quoted context omitted.

> Selling you code, lol -- code is more of a liability really :) It's important to consider that lawmakers (who are not well informed or downright stupid) might think code has intrinsic value because of media married with a lack of real-world experience.

Continuing your observation, this presumes they read and think deeply about the bills they vote on. They do not.

I remember the day I mentioned this in my high school^ honors sociology class and the eventual valedictorian exclaimed that I was stupid to think that. The system has been broken for longer than I have been alive, but the indoctrination has been working to make up for it.

This was a Blue Ribbon School 1992-1993 yup. https://www.ed.gov/sites/ed/files/programs/nclbbrs/list-2003...

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

#422

Post by almosthere »

kelnos wrote: post #98
timhigins wrote: post #28

Note that Trump's Big Beautiful Bill as it passed the House of Reps would bring back 100% expensing of R&D expenses including software development costs/salaries.

If the article is to be believed, though, the damage is already done. Companies have already laid off large portions of their R&D staff, and have canceled lots of forward-looking technical work. Re-hiring those people and restarting those projects can take years, and that's if companies feel confident enough that the exemption will stick around, and not get removed again in a few years.

It's always young companies that hire everyone, so it still helps.

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

#423

Post by Spivak »

metaphor wrote: post #397
Spivak wrote: post #377

Earlier quoted context omitted.

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.

Source? Consider a contractor in a software maintainer role; accounting for this as capex makes zero sense.

It's how they're classified at $dayjob. It doesn't matter what they do, it matters that their contract is a fixed expense rather than an ongoing one.

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

#424

Post by largbae »

Braxton1980 wrote: post #403
kasey_junk wrote: post #396

Earlier quoted context omitted.

That typically don’t vote for that party and are unsympathetic.

Unsympathetic because?

Generally R&D software developers aren't considered to be poor or disadvantaged.

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

#425

Post by jandrewrogers »

patmcc wrote: post #361
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.

They're still expenses, they just now need to be amortized. Buying a truck is an expense, as is buying gas for the truck. But the former you have to amortize over x years, the latter you can expense immediately. The law used to be "employee salaries for software are like buying gas" and now it's "employee salaries for software are like buying a truck".

The critical difference is that the business owns the truck but not the employee. The amortization assumes that the asset can be sold for value. An employee can quit at any time for any reason. You don’t retain the right to their labor for five years.

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

#426

Post by efitz »

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…

This is just wrong. It was passed in 2017 (during Trump’s presidency). It was to go into effect in 2020 (a presidential election year during Trump’s presidency). He hoped to be re-elected.

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

#427

Post by hollerith »

My reaction to learning about this is that it is good news: this explains the weakening of demand for programmers, but unlike the AI explanation, this explanation does not come with a large risk of the demand becoming much weaker than it is now.

Also, finally programmers with the right to live and work in the US catch a break: salaries for US-based programmers can be amortized over only 5 years as opposed to the 15 years of non-US programmers.

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

#428

Post by [deleted] »

vlovich123 wrote: post #345
trhway wrote: post #202

Earlier quoted context omitted.

What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers. Remember that stale "multi-used" sandwich served with the drink which by virtue of its existence converted drinking establishment into a food serving restaurant? Not being…

I'm not sure I buy into this. Sure, compared with Russia it's probably a lot less, at least in terms of being something everyday people engage in. But in terms of comparing with countries like Germany or Sweden I don't know. Here's some food for thought: * Global financial crises: Banks were paying (bribing) ratings agencies to rate junk bonds AAA. * Savings & loan crisis: widespread fraud & insider abuse. * Bernie M…

[deleted]

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

#429

Post by glompers »

rayiner wrote: post #408
adgjlsfhk1 wrote: post #363

Earlier quoted context omitted.

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.

[flagged]

This civic control correlation can simply have more to do with the most-white-supremacist Democrats switching to the GOP en masse and also simultaneously leaving multiethnic cities and school districts en masse after the 1960s. That self-selection left Republicans not a competitive amount of credibility or voter pool behind to work with. Your implication that policy dysfunction has ensued on that account rather than because of fiscal drain -- that's a separate topic. Individual states and individual cities have too many fiscal policy similarities and differences, overlapping, to responsibly compare in any online discussion.

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

#430

Post by Uvix »

sandworm101 wrote: post #369
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…

But where an established company invests steadily in software, whether it is amoritized or deducted year to year is a wash. Rather than harm tech, this would seem to protect established US companies at the expense of startups. Thats probably great for shareholders in publicly traded companies. It seems just another querk of taxation meant to maintain the established order

It's only a wash if they've been amortizing all along. There's been no advantage to doing so, so established ones have all been deducting, and will have the same five year window of increased taxable income that startups will.
Post reply on HN