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The time bomb in the tax code that's fueling mass tech layoffs

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Re: The time bomb in the tax code that's fueling mass tech layoffs

#581

Post by bombcar »

coliveira wrote: post #411
trhway wrote: post #202

Earlier quoted context omitted.

What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers. Remember that stale "multi-used" sandwich served with the drink which by virtue of its existence converted drinking establishment into a food serving restaurant? Not being…

> almost no lying and cheating here Are you living in an alternate world?

If you’ve never lived outside the US you have zero idea how bad it gets. It literally is an alternate world.

The amount of daily activities in the US that just work 99.999999% of the time that would have a corruption aspect in some other countries is mind boggling.

The closest analogy I can come up with is imagine if every money transaction involved cash tipping the parties involved. And that’s just the beginning.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#582

Post by rs186 »

antonvs wrote: post #575
coliveira wrote: post #413

Earlier quoted context omitted.

Theoretically no, but congress won't vote anything that has no collateral advantages to everybody involved.

Which is one of the many ways in which the system is broken.

It's almost funny that small code reviews are preferred in software engineering (https://google.github.io/eng-practices/review/developer/smal...), but in Congress we have these stupid "big beautiful bill(s)" that are sometimes thousand pages long, and sometimes only released hours before a formal vote. Almost like these bills are intended to fool constituents, cripple opponents' plans, and created just in the hope that they get passed and signed into law without anyone looking carefully.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#583

Post by bombcar »

avsteele wrote: post #228
Terr_ wrote: post #198

Earlier quoted context omitted.

That "suspends" should be understood as "continues to hold-hostage" / "renews as a time-bomb to screw over some other party".

That isn't the reason. They sunset in the bill so it has a lower CBO score (which calculates costs out to 10 years). If you sunset in the bill after 5 years, even if you know it will get renewed, the apparent cost goes down. Get it?

The CBO score is a perfect example of the metric becoming the measure and teaching to the test.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#584

Post by K0balt »

fhd2 wrote: post #555
deeth_starr_v wrote: post #529

Earlier quoted context omitted.

I’m not sure this is exactly true. If your foreign workers are a service contract then those are services expenses immediately deductible. Same if you are using local service contracts. My understanding is this creates a drag for companies that want to hire f/t.

Foreign workers are to my knowledge effectively always a service contract, since it's pretty complicated (if even possible) to hire FTEs across borders without subsidiaries, which are expensive to maintain. I'm curious if contract work is really exempt, would look like a major loophole to me.

Tax law is full of major loopholes. It’s highly political law, so doing one thing while saying you are doing another is a feature, not a bug.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#585

Post by rini17 »

9x39 wrote: post #487
jmknoll wrote: post #450

Earlier quoted context omitted.

I mean, the sitting President was shilling cars on the White House lawn and runs an active meme coin bribery slush fund. This is not slightly behind Western Europe. This is miles behind any developed country. China may be corrupt, but Xi Jinping hasn’t yet sold beans or cars via press conference.

The rule of law gets down to nitty-gritty levels, too, not just a reality show at the highest altitudes: trust the police don't extort you, the ability to gain relief in court (small claims or civil), trust things you build won't be looted overnight, trust in your neighborhood to walk at night or leave something unlocked, trust in your bank to wire things, trust in your title companies, trust in your package deliveri…

"Could be much worse" is a platitude not an argument. "It is improving" might be, if it were true.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#586

Post by pzo »

For me the worst things is that they treat all software as R&D. I understand in maybe some situation it could be abused but imagine established company having non innovative software that keeps engineers only for bug fixing and security patching and basic maintenance. In true spirit this is not research for sure. It's equivalent of someone having a hotel and suddenly telling that their cleaners, security, gardeners, receptionist qualify as R&D which would be nuts.

AFAIK it was also affecting more freelancers outside of US since amortisation is 15 years. For EU citizen IMHO this is equivalent of US putting tariffs on outside world. I wish EU at least try to fight back and revenge on US Tech by increasing taxes or also making all US tech bought by EU companies to be 15 years amortised so they have taste of their medicine.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#587

Post by K0balt »

dragonwriter wrote: post #530
Braxton1980 wrote: post #410

Earlier quoted context omitted.

>If the US were approximately an equal democracy, this might be less of an issue. How? Evenly divided voters and representatives are the issue. Each side can barely afford to lose 10% or so during votes

No, the reason the "there is always an in-party Senate spoiler" effect (when they have a Senate majority) seems to be more true of Democrats is because it is more true of Democrats, and the reason is that when the two parties in rough balance by popular support (or even rough balance in Presidential electoral prospects, which has the same directional bias as the Senate but of lesser magnitude), the Republican Party h…

It’s also because republicans politically punish dissent, while it is more tolerated in the Democratic Party. The consequences of “disloyalty” are higher in the Republican Party.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#588

Post by pzo »

Reason077 wrote: post #186

The 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...

> domestic software development

So now it seems its like a pseudo tariff against any other freelancers and producers for software outside of US.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#589

Post by mr_toad »

rurban wrote: post #578
demosthanos wrote: post #441

Earlier quoted context omitted.

Startups have to face that five year window every time they start up . Each and every startup will have a year 0 where they're spending more than they earn, and under the new Section 174 they will only get to deduct 10% of their employee's salaries that year. In year two they get to deduct 20% of year 1's salaries and 10% of year 2's salaries, which is still 30% of what the established players will be able to deduct.…

The net effect of this change can only be more tax income which benefits the society. Tax the rich

Increasing taxes does not always increase tax revenue. It’s easy to do enough damage to the economy that total tax revenues fall. Past that point is easy for the economy and government revenue to fall into a dwindling spiral.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#590

Post by matthewdgreen »

vineyardmike wrote: post #544
wvenable wrote: post #516

Earlier quoted context omitted.

The article is pretty clear that the law was from 2017 had a scheduled start date of 2022. Although probably not the actual intended effect, it does have the effect of confusing who would be responsible for it by those who don't read past the effective date.

> Although probably not the actual intended effect This is actually a really common intention in laws like this. Get the tax cuts during your term, and then kick the can down the road so your successor's term is marred by the bad law. If your successor wants to fix it, they need to pass a different tax to recoup the costs, and incur the publicity of "raising taxes".

I think it’s partly that and partly the fact that tax bills tend to be scored on a ten year time window. Note that this law doesn’t actually change the amount of tax that software companies can deduct, it just requires them to spread the deduction over several years. So if you’re scoring your new tax bill on a ten year window and five years into the bill this thing kicks in, then it looks like more tax is being collected in years 5-10. But that’s just an illusion because all the deductions are still there, they’re just being pushed out beyond the end of the window where they don’t “count”. At least this is my understanding.
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