The time bomb in the tax code that's fueling mass tech layoffs • Hacker News Board

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

#761

Post by jacobolus » Sat, Jun 07, 2025, 6:08 PM UTC

dan-robertson wrote: post #550

throwup238 wrote: post #528

Earlier quoted context omitted.

[flagged]

Often the way this works is that some time bomb is added to the tax code so that forecasts for future tax revenue will be higher (justifying more spending in the short term) and congress then needs to remember to remove the time bomb before it blows up. So it isn’t that uncommon for these things to be reverted.

Or in this case, not justifying extra spending, but justifying extra tax cuts for incomes above a half million dollars per year, inheritances of more than 5 million dollars, corporate profits, private jet flights, and a variety of other special tax cuts, mostly aimed at wealthy GOP donors.

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

#762

Post by caseyohara » Sat, Jun 07, 2025, 6:09 PM UTC

rs186 wrote: post #582

antonvs wrote: post #575

Earlier quoted context omitted.

Which is one of the many ways in which the system is broken.

It's almost funny that small code reviews are preferred in software engineering ( https://google.github.io/eng-practices/review/developer/smal... ), but in Congress we have these stupid "big beautiful bill(s)" that are sometimes thousand pages long, and sometimes only released hours before a formal vote. Almost like these bills are intended to fool constituents, cripple opponents' plans, and created just in the hope…

Code reviews for 10 lines of code: 100 suggestions

Code reviews for 1000 lines of code: LGTM

Omnibus bill packages get the same LGTM treatment where legislators don’t even read the whole thing.

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

#763

Post by jacobolus » Sat, Jun 07, 2025, 6:10 PM UTC

rayiner wrote: post #653

glompers wrote: post #429

Earlier quoted context omitted.

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.

> New York is a better governed state than Florida

Yes, New York is significantly more successful than Florida in almost every way: Better education, better healthcare, longer life expectancy, less pollution, lower crime, more productivity, higher wages, more amenities, better transportation infrastructure, less poverty, happier residents, and so on.

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

#764

Post by jacobolus » Sat, Jun 07, 2025, 6:13 PM UTC

hedora wrote: post #656

riehwvfbk wrote: post #513

Earlier quoted context omitted.

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 a…

The biggest root problem with California governmental structure is harmful constitutional features added by public referendum, especially Proposition 13 (1978). I guess you can blame "government" for that, but it doesn't seem like quite the right target.

The water crisis is a difficult problem because water rights are complicated and central valley farmers are an influential political group very focused on short-term preservation of water access and not as concerned with long-term sustainability.

> easily solvable housing, education, transportation and mental health crises

I submit that these are much less "easily solvable" than you claim. (What have you personally done to work on these problems, if they are so "easy"?) Legislators don't get to wave a magic wand, but need support of a wide variety of stakeholders who have contradictory demands and expectations (some of which are fairly unrealistic, but anyway..).

Education for example has competing goals of local funding vs. inter-city equity. Should the wealthiest towns get to spend arbitrarily much local property tax money on their own children's public schools while the poorer town next door is running out of toilet paper, or should the state try to equalize funding between schools to give every child the best opportunity? There's not really a "correct" answer to this, and every possible choice has some serious disadvantages.

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

#765

Post by maaaaattttt » Sat, Jun 07, 2025, 6:16 PM UTC

roflmao123 wrote: post #742

ccleve wrote: post #739

Earlier quoted context omitted.

They do pay taxes. They each pay personal income tax on their $100k.

Still plenty left to pay their business taxes.

And if it’s employees? Do you ask them to contribute to the company’s taxes as well? After they’ve paid their own?

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

#766

Post by [deleted] » Sat, Jun 07, 2025, 6:17 PM UTC

rayiner wrote: post #712

_heimdall wrote: post #668

Earlier quoted context omitted.

Is it your opinion that the only factor relevant for those deciding what state to move to is quality of government? I'm surprised that things like the job market wouldn't come into play, for example.

I think quality of governance is a major reason, yes. When my parents immigrated to this country, they moved to a deep red state (Virginia) instead of the deep blue state next door (Maryland). Why? A focus on good schools, low crime, and low taxes, instead of a focus on economic redistribution.

[deleted]

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

#767

Post by ant6n » Sat, Jun 07, 2025, 6:33 PM UTC

PaulDavisThe1st wrote: post #693

ant6n wrote: post #570

Earlier quoted context omitted.

I don’t get the big hoopla. Here in Germany I’m opting to turn development costs into assets (I simplify a bit). I need assets on the balance sheet, otherwise we’re over-indebted. As long as the development costs are much higher than income (I.e. as long as you’re not profitable), then it shouldn’t matter. And once you are profitable, you pay some more corporate taxes, but aren’t they kind of not too high in the us a…

the big hoopla is this: you're a newish startup. You have $300k/yr revenue and $$270k/yr expenses of which $250k is paying your programmers. prior to this rule change, what you pay your programmers is just a deductible expense, so you owe taxes (in this very simplified example with no other expenses etc. etc.) on just $50k. after the rule change, you can deduct only $50k of the labor cost (in this year), so now you o…

How does this work, in your first year, to have 300K revenue on 270K development cost. It sounds like some very specific boot strapping case, and even then after 70K deductions its 230K profit, so like 50K in taxes on 30K profit. Sure it’s annoying, but it doesnt sound like total doom. Its more likely youll have 250K programmer expense in the first year, 100K in revenue, need 200K in outside investment, and pay very little taxes. After a couple of years it evens out anyway.

Consider some sort of logistics company. They might pay 250K for their hardware (e.g. vehicles), 50K in expenses, get 300K in revenue. Theyll be taxed the same as the startup building up their IT assets.

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

#768

Post by jacobolus » Sat, Jun 07, 2025, 6:35 PM UTC

_heimdall wrote: post #625

Braxton1980 wrote: post #457

Earlier quoted context omitted.

He would do nothing because his supporters believe misinformation and worship him. Prices haven't gone down at all nor will bringing manufacturing to the US do this (likely causing them to go up) but his approval rating is 50%

> He would do nothing because his supporters believe misinformation and worship him. Interesting, that hasn't been my experience. I live in a very red part of the country and most people I know are Trump supporters, including some family members have been very MAGA since 2016. I've been hearing more and more complaints over missed promises: no Epstein files, raising budgets, RFK is starting to water down his promises…

He missed effectively every promise from 2016. Why did these people vote for him 2 more times, especially after an attempted coup? Maybe these "complaints" are just an attempt to dodge personal responsibility for having supported a catastrophe.

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

#769

Post by AStonesThrow » Sat, Jun 07, 2025, 6:43 PM UTC

Reason077 wrote: post #638

AStonesThrow wrote: post #551

Earlier quoted context omitted.

> US government is going exactly the same way of the Roman republic. We're gonna conquer and annex Egypt? What an awesome time to be alive!

Egypt? No. But how about Greenland, Canada, and Panama?

Kayfabe

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

#770

Post by demosthanos » Sat, Jun 07, 2025, 6:47 PM UTC

Retric wrote: post #755

bunnie wrote: post #537

Earlier quoted context omitted.

It's pretty bad. It had a huge impact on my personally, I'm a small R&D shop and basically I have had to end all risky long-term research projects. In addition to the research costs, I'd also have to pay taxes on the research costs mostly up-front. Significantly, if the project doesn't work out, I'm still out of pocket for the tax money. It's a penalty for taking a risk, and it kneecaps American innovators in a globa…

You’re likely overreacting. It makes software temporarily 16.7% more expensive in year one if you’re operating a profitable company, but you do eventually get to deduct that over time. Pay 8% on a 4 year loan and that drops to ~4%.

Eventually, as long as you survive that long.

As has been said repeatedly in this thread, this change is purely a boon for existing big tech companies that now have even less to worry about from startups. It takes a startup 5 years before they'll be playing on an even field with big tech.

> if you’re operating a profitable company

You keep saying this across this thread, and keep ignoring that Section 174 has now redefined "profitable" for tax purposes to include companies who:

* Are in year 1 with no history of expenses to draw on.

* Have spent i.e., a startup that earns $1mil and spent $8mil in software dev expenses is only able to deduct 10% * 8mil = $800k of expenses, which means that as far as the government is concerned they made a profit of $200k and owe taxes on that on top of their already-net-loss of $7mil.

You can keep ignoring this fact, but ignoring it doesn't help your case. If you want to argue that this is fine and dandy you need to explain why the above math doesn't prevent new companies from competing on fair terms with big tech.