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

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

#351

Post by codingdave »

sergiotapia wrote: post #283
codingdave wrote: post #155

Signing a letter is fine, but will not have the same impact as phone calls made to your representatives. https://5calls.org/why-calling-works/ You don't need to use that site - the point is that if you want to have the loudest voice, make some calls.

Ok, say I call. What do I say: "Hey I want to show my support for the Big Beautiful Bill because it reverses the tax deduction for software engineers." And then what? (asking honestly lol for anyone who's done this before)

Say whatever you feel. They will listen to you and sort it out into support or opposition to current legislative efforts. You don't have to have a perfect script - just tell them what you think. But I would caution you to talk about the issues you care about, not telling them you support a specific bill. Because they need to know what issues you care about so that when legislators propose changes to the bills (which always happens), they know whether those changes are aligned with what they are hearing from the people. You'll note that the letter OP linked to does not say that it supports the bill - it supports a specific change they want to be prioritized.

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

#352

Post by abrichr »

kazinator wrote: post #319
mediaman wrote: post #66

A lot of people don't know what this Section 174 is about, so here's a brief explainer. Normally, when you have expenses, you deduct them off your revenue to find your taxable profit. If you have $1 million in sales, and $900k in costs, you have $100k in profit, and the government taxes you on that profit. Section 174 says you can't do this for software engineers. If you pay a software engineer, that's not "really" a…

> If you pay a software engineer, that's not "really" an "expense", regardless of the fact that you paid them. If I pay for ... pretty much anything whatsoever ... I cannot write it off my personal income tax here in Canada. Not housing, not food. Medical expenses will come off the bottom not off the top.

Corporate income taxes are treated differently than personal income taxes. You absolutely can deduct corporate expenses in Canada.

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

#353

Post by gbacon »

naikrovek wrote: post #205
mediaman wrote: post #66

A lot of people don't know what this Section 174 is about, so here's a brief explainer. Normally, when you have expenses, you deduct them off your revenue to find your taxable profit. If you have $1 million in sales, and $900k in costs, you have $100k in profit, and the government taxes you on that profit. Section 174 says you can't do this for software engineers. If you pay a software engineer, that's not "really" a…

say I work for a company for 5 years as a software developer, at $200k/yr the entire time. is this how it works: year 1: company deducts $40k: 1/5 of the salary for year 1. year 2: company deducts $80k: 1/5 of the salary for year 2, and 1/5 of the salary of year 1. year 3: company deducts $120k: 1/5 of the salary for year 3, 1/5 of the salary for year 2, and 1/5 of the salary for year 1. year 4: company deducts $160k…

Even if Amazon pays no corporate income tax (only one category out of many), they pay much more in taxes per year than you would in several lifetimes.

The phrase “fair share” is political, which is to say meaningless. The people who have earnestly invoked this phrase in my experience have resisted requests to define the term and have sometimes launched personal attacks for daring to raise the question. Will you break this streak? What in concrete terms is Amazon’s fair share? Your fair share? If they differ materially, why?

I’m a capitalist and therefore wish zero ill toward you. Cronyists, authoritarians, and collectivists may want to abuse you, and that is a contemptible way to treat one’s fellow humans. Both parties to a free exchange benefit. Both sides can win because it is not a zero-sum game. As a matter of fact, you are advocating for a game that your side cannot possibly win. Consider that Amazon has enormous incentive to hire the very tippy-top best accountants and tax attorneys to find every crack in the tax code that middling staffers and nepo hires can barely scribble. It does create some benefit to society in the form of the incomes that these highly paid tax pros generate, the comforts it affords them, and the downstream jobs demand for those comforts creates. But in the big picture, it’s adversarial rather than constructive. Certainly we can come up with a more peaceful and constructive arrangement.

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

#354

Post by jweir »

The Small Software Business Alliance has been actively working on this issue since day one.

https://ssballiance.org/about/engage/

And Michelle Hansen was an early organizer https://x.com/mjwhansen

If you work at all in energy, the Clean Energy Business Network is also proactive in fighting for change. A couple of years ago they put me touch with Ron Wyden's staff. The Democrats are almost universally opposed to what was added to Section 174.

https://www.cebn.org/media_resources/house-republicans-advan...

Fight this thing - it is terrible. Not just for software but any innovative business in the USA.

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

#355

Post by guntars »

jandrewrogers wrote: post #270
ethbr1 wrote: post #226

Earlier quoted context omitted.

If we had specifically defunded highway patrol that was net-revenue-positive, yes. Republican defunding of the IRS is literally insane: reform by cutting enforcement. - It rewards people who cheat on their taxes. - It costs the government more money that it saves, because IRS investment is net revenue positive. But then, the modern Republican party seems more concerned with being the party of 'law(s I agree with) and…

People greatly overestimate the amount of material cheating that happens, especially among large companies and the wealthy. I used to work for a Federal audit organization and almost all of the recoveries had a root cause in sloppy compliance and record-keeping practices rather than intentional malfeasance. It is broadly recognized as optimal that the recovered money should be several-fold the direct costs spent to r…

I’d think it’s normal and expected that the “mistakes” made will err on the side of benefiting the taxpayer, i.e., reducing their tax bill.

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

#356

Post by stego-tech »

lazide wrote: post #259
stego-tech wrote: post #255

Earlier quoted context omitted.

I make said argument fully aware of the point of such schemes. It’s why I suggested, “You know, this is a good opportunity to rebalance the scales somewhat by utilizing a shared goal to extract reasonable concessions.”

My point is the entire point of them is to extract unreasonable concessions. The math has only shifted even more favorably for extracting even more unreasonable concessions too. Or do you think there is a sudden lack of Indian H1B applicants? Or that tech workers suddenly have more political power than they previously did?

I think any idiot with two functioning neurons can see the ruling class of India is trying to pull the same strategy China used to take manufacturing: consistently undercut foreign wages, centralizing knowledge and power before turning it on their customers and extracting wealth and power from countries or organizations that outsourced to them in the first place. I think it’s less a matter of who has more or less power, and more that there is an opportunity here for reconciliation in a way that most sides benefit to some significant degree.

* Foreign workers in the USA have more earning potential under such a compromise, allowing them to send more money home or bring family members abroad

* Foreign workers abroad see less exploitation and have more impact on domestic policies and industry

* Domestic workers see a slowing or reversal of outsourcing, increasing wages and job prospects

* Corporate leaders hold off another over-centralization of power by another hostile state, retaining agency and profits for themselves.

“The math” is not the be-all-end-all of things, for if it were we would have never lowered taxes as low as we did, enacted debilitatingly unsustainable defined-benefits programs like many pensions and Social Security, or handed out corporate subsidies as if money was free. “The math” paints a clear outcome of the current path that harms the collective peoples of multiple countries just so a handful of monied-classes can reap most of the rewards for themselves.

Stop relying solely on short-term data with limited constraints, or big data patterns absent context. Do some critical thinking and path predictions, and these sorts of answers become pretty glaringly obvious, as does the ability for a unique compromise to head things off now instead of a full-on hostile protectionist agenda if this is left unresolved.

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

#357

Post by sh34r »

teeray wrote: post #133
OneDeuxTriSeiGo wrote: post #119

Earlier quoted context omitted.

So it applies to software engineers but under what definition of software engineer? This [1] is the only definition the code actually give. > (3) Software development > For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure. 1. https://www.law.cornell.edu/uscode/text/26/174 ----- Is a test or QA engineer c…

> under what definition of software engineer? Probably a broad enough definition to net the US Government the greatest tax revenue possible for the effort to enact this.

A sufficiently idiotic tax scheme such as Section 174 can destroy far more income tax revenue than it collects, by destroying jobs and small businesses, and knocking high earners down a tax bracket or three. Section 174 isn’t doing much to tax FANG companies. Apple has all their profits in their Double Irish Dutch Sandwich racket. Amazon cooks the books to appear unprofitable on paper, in a manner that would make Hollywood accountants blush.

This really only hurts the competition, who is completely unprofitable in every sense of the word. And all for what? Left-shifting the collection of a 21% income tax by a couple years? I think many of us would’ve done terrible things in 2021 to only have an effective tax rate of 21%. The government mugged Peter the payroll tax man to pay Paul the corpo tax man, but they disemboweled Peter in the process, and most of the money had to be disposed of as a biohazard.

I don’t believe Section 174 was an honest attempt to manage the deficit. I think Zuck, the PayPal Mafia, and the blood-boy cabal bribed some Congresscritters to kill off what remained of their competition.

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

#358

Post by gbacon »

throwaway7783 wrote: post #309
naikrovek wrote: post #243

Earlier quoted context omitted.

> it massively increases that depends entirely on how much the business is taxed. every $1 deducted from taxable income is NOT $1 saved in that business' tax payment. It's much more like $0.10-$0.30 saved in taxes.

Whether it is $1 or $0.10, it is non existent for young software companies. If I'm penniless (after real expenses), where will I get those 10 cents to pay the taxes? And I'm not making this up. We are about to get cash flow neutral in our company, and this law will literally kill us and make 20 US citizens unemployed.

It is unjust. It is destructive. It actively impoverishes all of us. This is where they trot out the cold, detached assertion of Robespierre that one has to break a few eggs to make an omelet.

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

#360

Post by lazide »

stego-tech wrote: post #356
lazide wrote: post #259

Earlier quoted context omitted.

My point is the entire point of them is to extract unreasonable concessions. The math has only shifted even more favorably for extracting even more unreasonable concessions too. Or do you think there is a sudden lack of Indian H1B applicants? Or that tech workers suddenly have more political power than they previously did?

I think any idiot with two functioning neurons can see the ruling class of India is trying to pull the same strategy China used to take manufacturing: consistently undercut foreign wages, centralizing knowledge and power before turning it on their customers and extracting wealth and power from countries or organizations that outsourced to them in the first place. I think it’s less a matter of who has more or less pow…

The framing of your quote seems to think that people who are clearly not in charge, are the ones in charge that can do something about it eh?

Or, frankly, that if the people who are not currently in charge were put in charge, something different would be happening.

It seems rather silly, frankly.

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