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The time bomb in the tax code that's fueling mass tech layoffs
261–270 of 991 posts
Re: The time bomb in the tax code that's fueling mass tech layoffs
#262As a non-American, it seems strange to me that the cost of regular software development, i.e. that is neither “research” nor “experimental” in a conventional sense, would be deductible in the first place (amortized or not). Isn’t that subsidizing a whole business sector? Maybe I’m misunderstanding something.
Yes and part of the reason America is so rich
Re: The time bomb in the tax code that's fueling mass tech layoffs
#263Earlier quoted context omitted.
That would be the one positive I have heard regarding OBBB. This should be put into its own bill.
That isn’t how legislation is passed. If anything, it needs a section about acceptable tar shingle application standards for roofs within 6 nautical miles of any heliport operated in a subarctic area on the west cost. Then it’s looking like a bill.
And it gets so bizzare that even legislators have to laugh when they read it out loud, like in this case here in Switzerland:
Re: The time bomb in the tax code that's fueling mass tech layoffs
#264It's not only that, ZIRP[1] contributed. Also, the 10+ years before the layoffs started tech companies were on a hiring binge. Much of big tech was hiring to keep people off the market and off their competitors payrolls (this is from friends of friends in FANG HR departments). These were high paying jobs, too. [1] https://news.ycombinator.com/item?id=44141650
We are at a bad inflection point of Zirp, tax changes, and AI.
All of which make hiring engineers unattractive
Re: The time bomb in the tax code that's fueling mass tech layoffs
#265This is insane, how does it make sense? Employee salary expenses are no different from other expenses to run your business. Imagine they did this for raw material instead, a restaurant could only expense 20% of the food that they sell. If they purchased $100 worth of food, but could only sell $50 worth of it, they have to pay tax on that even when making a net loss overall. It just does not make any sense. There woul…
It was literally just a shot at California and New York, that’s all it was. “Own the libs” ya know
“if we aren’t rich then no one else will be”
Re: The time bomb in the tax code that's fueling mass tech layoffs
#266Earlier quoted context omitted.
Taxes are calculated according to tax accounting rules, not IFRS, though? I know of at least two Western European countries where you don't have to do that. Don't worry, we pay enough taxes either way ;)
I was confused and has to double check. In Australia you can deduct them https://www.ato.gov.au/businesses-and-organisations/income-d...
Came here to ask about the Aussie RDTI. So, if I spend $10M on R&D and make $5M, what's the difference between US and Aussie net?
Re: The time bomb in the tax code that's fueling mass tech layoffs
#267Earlier quoted context omitted.
Most businesses let you deduct inputs and capital expenses from your revenue so that tax only applies to profit. Since this is done on annual buckets it's very common to try to move items in both columns between years to minimize tax.
So if company A pays company B to develop some software, that revenue for company B (or rather, its profit) is still taxable? Then it makes sense I guess.
The revenue minus expenses is taxable, yes. And if the business itself makes no money, that means all of it was taxed through payroll.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#268This is insane, how does it make sense? Employee salary expenses are no different from other expenses to run your business. Imagine they did this for raw material instead, a restaurant could only expense 20% of the food that they sell. If they purchased $100 worth of food, but could only sell $50 worth of it, they have to pay tax on that even when making a net loss overall. It just does not make any sense. There woul…
Now imagine that a restaurant buys 100 tables, 500 chairs, kitchen equipment, cutlery for 800 people, signage, a security system, and does a remodeling before opening. (Or an airline buys an airplane. Or a hotel chain builds a hotel.) Should they be able to expense all of those items that provide value for multiple years in a single year? Does software development provide value exclusively in the year it's done? Or o…
Ironically I think they would want to claim that over multiple years unless they have other profitable operations under the same company. E.g. other restaurants.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#269Earlier quoted context omitted.
> Removing a specific tax exemption to create a level playing field isn’t discouraging R&D. If the end result of removing this exemption is that there is less R&D done in the US, then yes, empirically, removing the exemption discourages R&D. Assuming the mass layoffs were indeed fueled by the removal of this exemption (I don't know if the article is correct or not), then it is reasonable to assert that it is true tha…
> empirically, removing the exemption discourages R&D. Not clearing a road means fewer people use it, but you not going out with a shovel to clear a public roads isn’t you discouraging their use nor is you canceling your plans to clear said roads. Having zero subsidies is the default situation.
The default situation is whatever was yesterday. I’d be astonished to learn that even a single significant civilization functioned without subsidies or patronage of priorities held by a society’s leaders.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#270The OBBBA (“Big Beautiful Bill”) suspends amortization requirements for domestic R&D expenditure, and explicitly allows domestic software development as an R&D expenditure eligible for immediate expensing. The new rules would apply from 2025 to Dec 31, 2029: https://www.crowell.com/en/insights/client-alerts/house-comm...
This is a highlight in an otherwise shitty bill. I saw let Trump’s ugly bill die and then a small fix up to the tax code could be this. Should be able to pass.
This bill is goated for upper middle class and tech and defense sector
And I’m tired of pretending like we aren’t going to be beneficiaries
Every Congress increases the debt, we can acknowledge that the cuts they picked are going to wreck the lower class especially with the medicaid, we can acknowledge that it won’t meet its goals of cuts
but are you guys just scared to acknowledge its going to super charge things that you are a beneficiary of too? so busy saying it just benefits billionaires as if we’re trying to avoid guillotines. not gonna happen and many people here are going to try to take advantage of new programs