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Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

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Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#1

Post by dang »

Companies building software in the US were hit hard a few years ago when the tax code stopped allowing deduction of software dev expenses. Now they have to be amortized over several years.

HN has had many discussions about this, including The time bomb in the tax code that's fueling mass tech layoffs - https://news.ycombinator.com/item?id=44180533 - (927 comments) a few days ago. Other threads are listed at https://news.ycombinator.com/item?id=44203869.

There's currently a major effort to get this change reversed. One of the people working on it is YC's Luther Lowe (https://news.ycombinator.com/user?id=itsluther). Luther has been organizing YC alumni to urge lawmakers to support this reversal. I asked him if we could do that on Hacker News too. He said yes—hence this thread :)

If you're a US taxpayer and if you agree that software dev expenses should be deductible like they used to be, please sign this letter to the relevant committee members: https://docs.google.com/forms/d/1DkRGeef2e_tU2xf3TyEyd2JLlmZ....

(If you're not a US person, please don't sign the letter, since lawmakers will only listen to feedback from taxpayers and we don't want to dilute the signal.)

I'm sure not everyone here agrees with us—HN is a big community, there's no total agreement on anything—but this issue has as close to a community consensus as HN gets, so I think it makes sense to add our voices too.

Luther will be around to answer questions and hopefully HN can contribute to getting this done!

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#3

Post by vessenes »

Thanks for working on this guys. The current tax code is fairly crazy: you could spend a few million in salaries, sell 200k of software in a year and possibly owe taxes on that. Even if the company would otherwise be shutting down.

The traditional capital asset treatment applied to software leaves a lot to be desired. Some software is a capital asset, but much just isn’t. Or at least should be considered to depreciate rapidly.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#7

Post by stego-tech »

I’m all for reverting that part of the tax code, but only on the condition that it’s inapplicable to H-1B visa or foreign worker salaries/payments, provided that employer pays local taxes in those countries for those roles.

Keep good paying jobs in the USA. If we need immigrant labor, give them Green Cards instead of precarity.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#8

Post by nluken »

wodenokoto wrote: post #4

Other than it’s nice not to have your profession taxed, what is the argument that software development shouldn’t be taxed as opposed to all sorts of other white collar work?

The exact law is a bit more nuanced than a "tax deduction for software engineering", but I'm guessing OP put it that way because it makes for a snappier title on a SWE heavy forum like this one. I would check one of the threads that OP posted for more specific information on how the tax code changed a few years ago.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#9

Post by lazide »

wodenokoto wrote: post #4

Other than it’s nice not to have your profession taxed, what is the argument that software development shouldn’t be taxed as opposed to all sorts of other white collar work?

The proposal isn’t that it not be taxed. Rather that software dev be taxed like an expense, which is easy to track and rationalize, as compared to a capital improvement which is much harder to do so.
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