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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

#651

Post by epr »

testrun wrote: post #603
calderwoodra wrote: post #599

Earlier quoted context omitted.

I'm not an accountant, but as I understand it, you don't pay taxes on profits, but on revenue. So previously, some 20% of all revenue would be owned as corporate income tax, and startups would deduct it all as they're spending much more on R&D than they owe in corporate income tax. But with this tax change, the deduction would be much lower (80% lower IIUC).

No, you pay taxes on profits. What this does is reduce your upfront deduction.

Yes, but the main thing here is that ALL software development is now "profit" in the short term. In theory you've developed a capital good that benefits you over time, hence the amortization.

Simplified 2021 example before 174:

    100k Revenue
    100k Software Dev Costs
    No profit or tax
Simplified 2022 example after 174:

    100k Revenue
    100k Software Dev Costs
    90k "profit"
    18.9k taxes
Above example is year one of suddenly having these taxes, because if your software costs are the same or lower over time it gets easier. It's just extremely painful for smaller and especially fast growing companies like startups without a lot of cash, especially when interest rates are so high.

Accountants: If I am wrong about the above, please correct me

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

#652

Post by [deleted] »

throwaway173738 wrote: post #639
xyzzyz wrote: post #621

Earlier quoted context omitted.

That’s just confusing cause and effect. If your seats are safe, you have no reason to agree to forming an independent commission. The same is true in both heavily blue and heavily red states. Are districts more competitive in states where Democrats draw maps? I don’t think so.

This totally ignores values and motivations, and I would argue that only one group in your comment values winning at any cost.

[deleted]

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

#653

Post by rayiner »

glompers wrote: post #429
rayiner wrote: post #408

Earlier quoted context omitted.

[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…

> That self-selection left Republicans not a competitive amount of credibility or voter pool behind to work with.

So by your logic New York is a better governed state than Florida? Net internal migration would seem to disagree.

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

#654

Post by hedora »

stahtops wrote: post #573
rayiner wrote: post #404

Earlier quoted context omitted.

I don’t think most progressives think about it in that detail. Raise taxes on the rich tech companies that are gentrifying san francisco.

At first glance I support ... "social and economic equality" and "reforms to improve human conditions, combat corruption, and reduce inequality". Am I progressive? If you ask me "should corporations pay more taxes?" I will say, yes. Famously so does Warren Buffet, is he also a progressive? If you ask me, "hey should we gut tax incentives for R&D spending in the USA?" I will say, uhhh no? probably a bad choice?

Recently the progressives have latched on to culture war agendas against the wealthy, educated, white, male, straight and/or over the age of 35 crowd.

In other words, they have a popular agenda, but are political morons that are going to eventually wonder why they can’t break out of solidly blue districts.

https://runforsomething.net/run/candidate-support-system/

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

#655

Post by mystified5016 »

anticensor wrote: post #618
bunnie wrote: post #566

Earlier quoted context omitted.

Work-for-hire open source contributions often already bear a copyright holder of the entity paying for the work. The problem isn't who is the copyright holder. The problem is that the license assigned says that anyone is free to use the code. Anyone is a set of people that includes the contributor, which then triggers the interpretation that the research is incrementally in the contributor's benefit and thus disquali…

> a source control system that hides the source files from the contributor's view of the repository. How would that work? > You'd need a custom license where everyone in the world could use the results except for the contributor That one is incompatible with copyright laws in many countries outside USA.

The point is that it's a ridiculous and impractical workaround that makes no sense

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

#656

Post by hedora »

riehwvfbk wrote: post #513
Braxton1980 wrote: post #456

Earlier quoted context omitted.

What makes California's government dysfunctional? What about Detroit?

A government that runs the richest city in the country (SF trades this spot with NY every few years) and makes it look the way it does is the definition of dysfunction. And Detroit... well, I guess now that they've bulldozed all the abandoned buildings it looks less like a post apocalyptic hellscape and more just abandoned. An improvement I suppose.

California also has easily solvable housing, education, transportation and mental health crises that are entirely driven by mismanagement by the state government. They haven’t done anything meaningful to address these issues in 25-40 years depending on the issue.

Heck, they ignored the water crisis for twenty years, and what they’re doing now for aquifer replenishment is still less than what makes sense.

I say they are easily addressed because simply reverting to California’s policies from ~ 1975 would greatly improve the current situation.

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

#658

Post by kbolino »

orangecat wrote: post #70
dtagames wrote: post #9

Earlier quoted context omitted.

If your company is already profitable to the tune of billions annually, "cost cutting" isn't necessary. You're just cutting people out of jobs and out of economic participation in society -- which affects a far larger group than just themselves when those folks can't spend their salaries in other businesses. There is no justification for "cost cutting" when it hurts the larger economy. If the company were losing mone…

If a company is making $10 billion in annual profits, and they discover that they're spending $100 million on a useless project, are they morally obligated to continue that spending indefinitely? There is no justification for "cost cutting" when it hurts the larger economy. It is not good for the economy to have people doing work that doesn't produce value.

> It is not good for the economy to have people doing work that doesn't produce value.

This is a political statement, not an economic one. What is or isn't good for the economy is up to the goals of that economy. In Japan, for example, they've more or less adopted the opposite principle as an important plank in their political system. Or perhaps it would be better to say that they've adopted the idea that people having jobs is more important than those jobs having a direct connection to some measure of productivity.

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

#659

Post by hshdhdhj4444 »

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…

Exactly!

The change is very simple. And the predictable impact of the change is very clear.

It shouldn’t impact large companies that are already profitable. But it’s devastating for software companies that are not profitable yet.

And that’s without even getting into the philosophical issues with it.

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

#660

Post by bonoboTP »

Supermancho wrote: post #290
jopsen wrote: post #279

Earlier quoted context omitted.

Amortization makes sense for things that have some inherent value. Like a microscope or computer. A bankrupt company can still sell their computers. Selling you code, lol -- code is more of a liability really :)

> 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.

Lawmaker is a misleading word. The people who actually make the law and lobby for it probably know quite a bit. The representatives are law voters not makers. They don't design the laws literally. They vote because they are told to.
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