Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

OBBB signed: Reinstates immediate expensing for U.S.-based R&D

kbkg.com

Post reply on HN
Print view View original

131–140 of 395 posts

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#131

Post by nandomrumber »

ChromaticPanic wrote: post #112
nandomrumber wrote: post #106

Earlier quoted context omitted.

What evidence is there of governments being more successful at picking winners than the market? Governments should stay out of the winner-picking business, which they do with money from the public purse, and allow individuals and enterprise to use their own money to have a go at picking winners themselves. If industry and banks find investment in any particular field unpalatable without Government incentive, then tho…

This isn't a game so it's not about picking winners. It's about steering the economy so local businesses get an advantage over foreign entities.

By all means, have government get out of the way so the economy can get on with it.

I'm more in favour of tax incentivised encouragement, lowering the barriers to entry, and more so when there are proven benefits to the economy and society, and less in favour of government backed loans and direct cash injection.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#132

Post by zeroonetwothree »

ldjkfkdsjnv wrote: post #88
seattle_spring wrote: post #83

Earlier quoted context omitted.

Anyone who knows anything about software and has used AI for more than 24 hours knows that AI won't be "replacing" software engineering anytime soon.

ive been coding 5+ hours a day almost every day for 15 years. i think ai will replace 70% of SWE in the near future. not employement, but 70% of the current work done by engineers

I don’t even spend 70% of my time coding. I suspect that’s common and looking at data it’s more like 25% on average. So even if it replaces 100% of coding (unlikely) that’s the extent of the gain.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#133

Post by Galanwe »

ttul wrote: post #84

Meanwhile, in Canada, not only can you expense R&D, but there is a cashable tax refund that will give you back about 60% of your developers’ salaries…

There is something similar in France, the Crédit Impôts Recherche (CIR), I remember it was around 50%. I've heard it's going to disappear though, there were abuses.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#134

Post by me551ah »

I doubt if this will make much difference. Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well.

Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–70 % below U.S. rates:

• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.

• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.

• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.

In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#135

Post by autobodie »

lukeschlather wrote: post #50
beebmam wrote: post #6

Earlier quoted context omitted.

There's also H-1B (and other worker visa) restrictions/costs imposed. Overall, quite good for the American tech worker

IDK, sounds like it's a bunch of stupid misc. fees. So instead of just raising the minimum wage for H1Bs and indexing it to inflation, they raise taxes (and these taxes on H1Bs don't seem like a consequential funding source. They might even bring in less tax revenue than raising the H1B minimum wage to where it should be if it had originally been indexed to inflation.)

>raising the minimum wage for H1Bs and indexing it to inflation

Huh? Not even regular minimum wage is indexed to inflation. What are you talking about?

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#136

Post by tareqak »

n_u wrote: post #8

It also classifies software development as R&D which together with immediate expensing for R&D undoes the Section 174 changes as far as I understand. “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“ Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf Original article ab…

Page 301

> there shall allowed as a deduction any domestic research and experimental expenditures which are paid or incurred by the taxpayer in the current taxable year

AFAIK, there was no domestic vs. foreign R&D distinction in section 174 before.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#137

Post by throwawaysleep »

akmarinov wrote: post #130
seattle_spring wrote: post #83

Earlier quoted context omitted.

Anyone who knows anything about software and has used AI for more than 24 hours knows that AI won't be "replacing" software engineering anytime soon.

Hard disagree, I’ve been agentic coding the past couple of months and have written maybe 100 lines doing this for a living. The rest is coming up with SDDs and reviewing AI’s code. I can easily see most devs, doctors and lawyers automated away in the next couple of years.

Very much agree.

I am overemployed with 3 dev jobs at once. AI is writing virtually all my code and letting me nap all day. Eventually that will end once people see the power of them.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#139

Post by autobodie »

BobbyJo wrote: post #123
root_axis wrote: post #109

I believe the impact of Section 174 has been vastly overstated, sadly we will soon observe this to be the case.

What do you base that belief on?

I would assume they think the cause of the layoffs was more related to the non-zero interest rate.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#140

Post by Canada »

anovikov wrote: post #121
ttul wrote: post #84

Meanwhile, in Canada, not only can you expense R&D, but there is a cashable tax refund that will give you back about 60% of your developers’ salaries…

So it means that indirectly, developers' salaries are not a taxable income in Canada if they are working on R&D? Meaning, they do pay taxes on their income, but their employer gets those taxes back, so if tax is 60%, the employer could pay 250% of what they'd pay otherwise, get 150% back, then the developer pays 150% of taxes, and gets 100%, so in effect the salary is tax-free. Is that what you meant to say? If so, i…

Yeah, I never thought of it that way. Your plan sounds great, but, in practice how it works is you get paid about half of what you would get in the US. Currently less than half due to the unusual currency exchange rates.
Post reply on HN