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

I don't follow. What is the motivation of doing something intentionally bad to make it easy to reverse?

There could be a distinction between creating new value (greenfield), and maintaining existing value (brownfield). Most of my work is green field and I do consider it to be a capital asset, it's sweat equity as I don't pay myself, but I can't deduct my non-salary either. Others estimate the most of the software work is 95% brownfield.

An other issue is competitiveness with other jurisdictions that don't have these tax laws, but even if that were normalized there are jurisdictions that are far lower tax in general regardless of the classification.

AFAIK there are a handful of companies that gobble the whole yearly allowance of H1B visas among them. Usual suspects are BigTech and large consulting groups. The later act as intermediaries: they sell worker hours at a higher rate, skimming the difference between their prices and employee's salary. If they were somehow barred from H1B program the H1B visa holders would presumably find better paying jobs elsewhere.

H1B rules around changing jobs means that even if the employee joins at a market-level salary when they come to the US, they tent to stay at the same company much longer and can be exploited. The new company has to go through a lengthy paperwork process to allow the visa holder to switch jobs. Also, since the tech world tends to use things like stock options / RSUs / monetary bonuses for large parts of compensation package and those do not count towards "salary" you may have a situation where an h1b holder on paper seems to be paid fairly but in practice get only about 40-50% of what their peers get.

If they were allowed to change jobs freely they would be able to negotiate their compensation fairly. The companies would be less intensified to hire H1Bs to save money and would also consider local talent for same positions. Everybody would win: both H1B visa holders and their families and American workers, too. The only losers would be consulting firms (not a huge loss, to be honest, most of their employees are overseas anyway, so the can absorb the cost) and BigTech (they have enough money, anyway).

There are other problems for H1B holders, like getting a green card is something their employer, and not them, can do - another area for abuse. And then some nationalities have to wait much longer to go through this process then others (essentially, the US migration service says that the country has too many people from India and Pakistan already, thank you very much), and there are other issues I don't recall.

> This is unlike how capital assets are valued for any other industry!

Is your dismay that it's unfair compared to other industries or that the policy doesn't reflect reality that software is a capital asset that has a lifetime longer than 6 years for many companies?

Can someone steelman the positives for me? I don't see how it's anything but pure regulatory capture favoring established tech firms. A small company ramping up revenue simply can't handle this amortization while a large, established company can.

That being said, I do think there's a little sloppiness in what is categorized as "R&D" in the software development. Is code maintenance R&D? Bug fixes? Performance improvements? Is it a "capital asset" no longer under R&D once it hits production? This aspect has always seemed too gray given how much money is at stake in taxes.

But again, this complexity is an advantage for more established firms with legal departments and the infrastructure in place to document everything in order to handle audits. Which, in my view, is a form of regulatory capture; this presentation of symptoms of regulatory capture is pretty common.

One potential argument I can see is that maybe this balances out since presumably the more established firms would have less "R&D" as a fraction of expenses to deduct in the first place?

Edited to fix some typos and clarity.