Could this lead to a new financial product that lends money to companies to pay this tax secured on the future deductions?
This would be a no go for startups though.
The time bomb in the tax code that's fueling mass tech layoffs
271–280 of 991 posts
Re: The time bomb in the tax code that's fueling mass tech layoffs
#272So, we want incredibly profitable companies like Google, Microsoft, and Apple to take their software development costs and subtract that from their tax bill?
These are the same companies that file patents so nobody else can use the ideas that they developed at the expense of public services.
How about making it a tax break only for small and medium sized companies?
Re: The time bomb in the tax code that's fueling mass tech layoffs
#273Earlier quoted context omitted.
> It is complex - is it better for the money to go back into the economy by paying high salaries to a specific group of highly-educated people? Yes. Also, the salary will not go _only_ to highly-educated people. For example, if Amazon decides to build a new distribution center, it will employ blue-collar workers to build it, not software engineers. > Or is it better for the money to go back into the economy through t…
Jesus man, how can you look at the economic history of the past 30 years and still think neoliberalism is the way to go?
because a high percentage people on HN fall into the group that benefits more from neoliberal economics than the larger group of people within those economies who don't benefit.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#274Earlier quoted context omitted.
We're not talking about a tax deduction in the sense of a special privilege, we're talking about simple calculations of profit. Before this change, tax for software development was calculated against: * Profit = Revenue - Expenses And software developer salaries fell neatly into Expenses unless you were looking for an R&D tax credit. After this change, tax for software development is calculated against this new equat…
It is a subsidy! Why should money spent on software _development_ not have to be deprecated over time like other money spent on _development_? I get that it sucks from a cash flow standpoint but the same is going to be true of other R&D expenses. It's just that we're more exposed to this specific R&D expenditure and not others.
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Re: The time bomb in the tax code that's fueling mass tech layoffs
#275Earlier quoted context omitted.
That "suspends" should be understood as "continues to hold-hostage" / "renews as a time-bomb to screw over some other party".
Removing it would make Congress less powerful, and we can't have that now can we.
If anything it has been the opposite problem, with modern congresses having been more than happy to delegate away their powers. You might have heard the recent tariff news for example.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#276Why is this the first we’re hearing about this, three years in? The article says these companies blamed other factors for the layoffs - why?
“We are heavily subsidised by taxpayers” is not great optics.
To head off the likely questions, I downvoted this comment because it is a gross misrepresentation of section 174 and the changes made to it.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#277Earlier quoted context omitted.
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 th…
I agree but I think the huge cuts across public research & development basically hurt everybody in the long term.
Re: The time bomb in the tax code that's fueling mass tech layoffs
#278so will this incentivize a return to revenue/profit-driven business models? will we start to see a reduction in venture capital burning money on revenue-negative startups?
Re: The time bomb in the tax code that's fueling mass tech layoffs
#279Amortization is bad policy when it comes software. Software is inherently high risk. Every piece of software is unique and does not guarantee steady income over 5 years. Most startups won't survive 5 years to fully realize the deductions. This is the end of US software dominance.
Amortization makes sense for things that have some inherent value. Like a microscope or computer.
A bankrupt company can still sell their computers. Selling you code, lol -- code is more of a liability really :)
Re: The time bomb in the tax code that's fueling mass tech layoffs
#280The 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...
Repealing SB174 has bipartisan support. The house already passed its repeal but it died in Senate because a separate took (that also repealed it) took its place but that separate bill stalled out. 174 is so small it can't go through both chambers on its own so it needs to get attached a larger bill like OBBA. It's unfortunate because it appears both sides want this repealed to allow immediate amortization of domestic…
It's so depressing to hear that congress can't even do small things that everyone agrees upon.