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It won't push people to outsourcing, because the same code change requires 15 year amortization for foreign R&D expenditures.
Perhaps not as straight forward, outsourcing is generally lot cheaper.
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This is a much better article: basically these companies are paying for the tax cut Republicans gave the to the top bracket in 2017: > In 2017, then-President, Donald Trump, signed the 2017 Tax Cuts & Jobs act, which overhauled tax codes and reduced tax – for example, it reduced the top tax bracket from 39.6% to 37%. To make the bill pass strict budgetary rules, the Senate used a process called reconciliation: adding…
This is correct. Since it was basically accounting sleight-of-hand to get a better score from the Congressional Budget Office, they knew this would be disastrous if it took effect, and were widely expected to repeal it before it did. That deal, which also paired fixing it with the child tax credit, fell apart in December 2022.
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Yeah, it’s an election year so even a literal statement of fact is going to be downvoted by some people. Hopefully at some point they’ll have an epiphany about whether they should self-identify with a party so strongly when an accurate descriptions of its actions feels like an attack, but I’m not as optimistic about that as I used to be.
It’s a partisan statement since you only mention the upper tax bracket and not that it also slashed taxes for the lowest one completely and reduced them for basically everyone while making changes to a ton of other things (like child tax credits) as well. You’re over simplifying and singling out your pet political issue in an effort to sway opinion to your political leaning. If you had just said it was due to those t…
https://www.taxpolicycenter.org/publications/distributional-...
I’m confused why this is so impactful. If you have software devs, even if you don’t classify as R&D, you can deduct their full salaries, right?
This is regardless of whether you classify the costs as R&D for the purpose of claiming a tax credit under Section 163.
How does one determine whether work done by an employee is classified as R&D or as an immediate expense? If a programmer is building an app that isn't yet offered as a product, is that R&D? If a programmer is maintaining an app that is offered as a product, is that NOT R&D?
tldr: if they're developing new features, it has to be capitalized; if they're doing maintenance then it can be immediately expensed
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You MUST spread it over 15 years, which is brutal for most companies and will mean no longer hiring any foreign R&D or software development contractors.
Why is spreading something out over 15 years harder than spreading it out over 5?
With an S Corp, you have to pay yourself a salary, and if your work is primarily software development, Section 174 might hit you. (IANAL or accountant. Talk to one of them.)
Take action and sign up for the Small Software Business Owners Association newsletter and petitions to the government: https://ssballiance.org/ Michele Hansen is doing an incredible job here and should be recognized for it. Latest news was sent yesterday: Republicans and Democrats finally struck a tax deal that includes a partial fix for Section 174. It includes expanding the Child Tax Credit, a key Democratic priori…
Going on a tangent here, but I always hated this idea of reading off a script to try and lobby politicians. If I were the politician, I would ignore all such communiques as indoctrinated spam.
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Why is spreading something out over 15 years harder than spreading it out over 5?
This isn’t like a loan where the longer the term the smaller the payments. It’s the reverse. You essentially pay taxes now on income, and can’t deduct costs for 5 or 15 years. So it’s kind of like pre-paying taxes and not getting the money back for 5/15 years. Say that you need to go borrow cash to cover the shortfall. Is it cheaper to borrow money for 5 or 15 years?