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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

#521

Post by wvenable »

dboreham wrote: post #328
tomrod wrote: post #306

Earlier quoted context omitted.

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.

They were not thinking about various exploits and vulnerabilities but rather making whatever compromises were necessary in order to form the union. It was negotiation, not planning.

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

#522

Post by ridomune »

arkis22 wrote: post #506
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…

salary is already counted as an expense right? does that mean we were double billed as two expenses? salary and R&D?

more like triple. do not forget the sales tax when you're spending it.

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

#523

Post by jbverschoor »

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

It is being roled back partly https://news.ycombinator.com/item?id=44028106

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

#524

Post by ec109685 »

potato3732842 wrote: post #4

>The delayed change to Section 174 — from immediate expensing of R&D to mandatory amortization, meaning that companies must spread the deduction out in smaller chunks over five or even 15-year periods. Doesn't this just amortize out to be roughly the same amount of deduction over the long term? All the big companies mentioned should be relatively unaffected over an N>5 year time period. Also this was something that's…

Yes, big tech companies are lesser affected and they were already amortizing their expenses as “cap labor”.

It’s a pretty bad article general and to blame the law change on this is all kinds of disingenuous: “It’s no coincidence that Meta announced its ‘Year of Efficiency’ immediately after.”

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

#525

Post by Dylan16807 »

sarchertech wrote: post #434
Dylan16807 wrote: post #355

Earlier quoted context omitted.

"uses their unrealized gain to secure a loan" sounds impossible to define with enough precision that you could base taxes off of it.

Have you taken out a secured loan in the last year over x amount? Take the value of the asset assessed by the bank and the price paid for the asset to find the total value that is unrealized gain. Divide that by the total value to get percent of collateral that is unrealized gain. Multiply that by the loan value. Then multiply that by the tax percentage. All you need is for banks to report secured loans to the IRS an…

Secured loans of that form are easy, sure.

But if those skyrocket in price from tax, they'll be more subtle about convincing banks they're good for the money and pay a slightly higher rate for unsecured loans.

Or maybe they'll just treat the asset securing the loan as having the pre-gains price. Get the bank to agree it's worth at least what you paid, with no further analysis.

If you try to plug those loopholes you lose the "much easier to do because there is no disputing the assessment since the person implicitly agrees to the valuation" factor.

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

#526

Post by ec109685 »

TheTaytay wrote: post #37
potato3732842 wrote: post #11

Earlier quoted context omitted.

Sure, but that doesn't account for the allegedly apocalyptic layoffs from companies that don't fit into the "real taxes on imaginary gains" mold. I get that this is bad for the VC monopoly bucks scene, but they were already down for the most part. If the changes are as the article alleges than all these big tech companies that are posting huge layoffs should mostly be fine because it's not a serious change from statu…

My company was affected. The amount of money paid in taxes more than quadrupled from one year to the next. It hurt small businesses that were slightly profitable. No one else. VC shops aren’t profitable anyway, so no taxes to pay. Microsoft took a 4 or 5 billion dollar write off, but they can literally write a 5 billion dollar check. The issue is that the IRS wants you to pay them today on profits and cash that liter…

Yes, but you are still talking about a loan. That 1M in write offs are guaranteed to come over a five year period.

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

#527

Post by ec109685 »

ghiculescu wrote: post #337

The most fascinating question is not "How did a single line in the tax code help trigger a tsunami of mass layoffs?" but how did a single line in the US tax code help trigger a tsunami of mass layoffs in other countries?

Because people make stupid correlations for clicks.

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

#528

Post by throwup238 »

jweir wrote: post #138
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…

We are small and so have been on a hiring freeze since 2022. I’d like to hire but the upfront cost is high. For those around when this went into effect many business owners were surprised. Our accountants told us they seriously thought congress would fix this before it went into effect.

[flagged]

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

#529

Post by deeth_starr_v »

e40 wrote: post #221
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…

And if the R&D uses foreign workers, because you can't afford to pay US wages, then the 5 years goes to 15 years! This hurts small companies (like mine) that were priced out of the US developer market.

I’m not sure this is exactly true. If your foreign workers are a service contract then those are services expenses immediately deductible. Same if you are using local service contracts. My understanding is this creates a drag for companies that want to hire f/t.

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

#530

Post by dragonwriter »

Braxton1980 wrote: post #410
dragonwriter wrote: post #251

Earlier quoted context omitted.

> As a progressive, it seems like the Democrats always have Senate spoilers... With Republicans usually being dominant in a number of states, if Democrats have a Senate majority, it is usually both narrow and dependent on a very small number of Democratic and/or Dem-leading moderate independent Senators from Republican-majority states who vote with the party on leadership, but are soft (or firmly opposed to the progr…

>If the US were approximately an equal democracy, this might be less of an issue. How? Evenly divided voters and representatives are the issue. Each side can barely afford to lose 10% or so during votes

No, the reason the "there is always an in-party Senate spoiler" effect (when they have a Senate majority) seems to be more true of Democrats is because it is more true of Democrats, and the reason is that when the two parties in rough balance by popular support (or even rough balance in Presidential electoral prospects, which has the same directional bias as the Senate but of lesser magnitude), the Republican Party has a systematic edge in dominance of states, which translates into a systematic advantage in the Senate, which means that when the Democrats have a Senate majority, it tends to have a decisive segment in red-state Democratic Senators who are unreliable on key priorities.

The issue being discussed in the Senate is not a symmetric issue resulting from near balance in support between the parties.

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