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Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

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581–590 of 957 posts

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#581

Earlier quoted context omitted.

Not in a way that makes us even easier to hate, for a start. You really want a big noisy political carveout in what is already being called the largest upward wealth transfer in history? You want to find out what it's like to be in a line of work that has the reputation for having to steal from the American people to survive? We have enough of that reputation already. If you want a better answer, tell me who our frie…

>Not in a way that makes us even easier to hate, for a start. You really want a big noisy political carveout in what is already being called the largest upward wealth transfer in history? You want to find out what it's like to be in a line of work that has the reputation for having to steal from the American people to survive? We have enough of that reputation already. This is bullshit. The carveout already exists an…

This is politics. Perceptions matter. Changing the status quo is more difficult because it is the status quo, and that also matters.

If you want to sell this change, the way to do it is to hammer on the fact that it was Trump's own TCJA that created the current situation, or that it was the machinations of a hostile Congress that so perverted the original intent of the TCJA, depending on audience. But even that is not likely to work, not in a post-"Twitter Files," post-Careless People world.

I don't know what kind of bubble you live in but if I were working this year I wouldn't be super comfortable talking about it, the same way if I had previously made the mistake of buying a Tesla I would by now have unloaded the damned eyesore even at a loss.

No one is upset to see us suffer. If you think that should change, fine. Complaining at me about it won't achieve that. I did not ask how you think things should be. I'm telling you how things are.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#582
post #148

Anyone know what the situation in Europe is?

Most European countries don't have deductions for SW devs. Romania had it for a long time and removed it due to gov budget deficits. Some other CEE countries might still have them, but in general most socialist western European countries don't have them, which is why they don't have a tech industry.

Is that a special case for SW devs or they also aren't able to deduct other employees?

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#583

So this is a huge problem, and one worth tackling, but I worry very much about the timing of this post in the context of the bill being brought before the Senate now. We should not implement horrific legislation just because we agree with a single provision. Calling your representatives is the right path, but you MUST be explicit that you do not support the current bill being brought forth that addresses this. Here a…

> We'll correct the ills of the 2017 administration in time How? We have - at times - had democrats in charge since 2017 and they did nothing to resolve this either. We appear to be waiting for flying pigs.

Except in 2024 when the house passed a bill that included repealing it.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#584

Earlier quoted context omitted.

Has the IRS actually dinged anyone for fucking with how they categorise software expenses?

They have, but they’ve fired everyone. Literally. I have a relative who was fired while testifying in court, he ended up stranded in some flyover shithole. The real issue is the auditors will flag it.

> auditors will flag it

For tax books?

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#585

Earlier quoted context omitted.

…could you expand on what part is inaccurate?

One example: "What they've actually done, congress said, is bought a capital good, like a machine." Replace "like a machine" with "like software"

How is that profound?

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#586

Earlier quoted context omitted.

> Assuming the tax rate is 50% Which is not(?). According to https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_St... , federal corporate income tax rate is 21%, + additional <10% for state level, not sure about local level.

One of the reasons small businesses have been hit so hard with this is because for then (when incorporated as LLCs), their tax rate is 37% + state + local. I live in NYC and my LLC has a combined tax rate of 50%.

Note that LLC isn't a tax status

An LLC can either file as a c corp and get corporate tax rates, or (sometimes) file as passthrough like as in a sole proprietorship. Or as a partnership. It gets complicated

https://www.irs.gov/businesses/small-businesses-self-employe...

Anyways, it's up to you, it's not necessarily due to it being an LLC.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#587

A lot of people don't know what this Section 174 is about, so here's a brief explainer. Normally, when you have expenses, you deduct them off your revenue to find your taxable profit. If you have $1 million in sales, and $900k in costs, you have $100k in profit, and the government taxes you on that profit. Section 174 says you can't do this for software engineers. If you pay a software engineer, that's not "really" a…

I don't want to downplay what you're saying but many of these costs are eligible for R and d credits unlike most other employees salaries.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#588

Earlier quoted context omitted.

The Republican Party is actively antagonistic to any legislation from the Democratic Party basically. You need a 60% vote or you need to take away someone else’s pie. Medicaid/medicare/social security are current contenders based on Republican planning. The bigger issue is Republican voting districts gain less from putting it back in place. Most software devs are on the coasts and Denver.

@cryptonector - but did they have a 60% margin in either house? 50%+1 isn't enough (AFAIK) to undo previously passed legislation.

The "or you need to take away someone else’s pie" is the relevant part here

The 174 changes (and SALT changes, and some other stuff) were how TCJA got balanced and passed without a 60% majority. 50%+1 is enough to undo previously passed legislation that was also passed with 50%+1 in this case (handwaving - not exactly right, because the balancing point is a different time range, so the math might not work out exactly the same).

The Democratic party absolutely could have passed some legislation in 2021-2023 to undo a lot of TCJA with just a 50%+1 vote, if they cut other stuff to balance. They didn't do that though. In part because they had literally 50%+1 majority and couldn't lose a single vote in the Senate, and couldn't come to an internal agreement.

Re: Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

#589
post #502

Earlier quoted context omitted.

So because this is something we can do now and we want to do something now, we do this?

Supporting this is making a deal with the devil because he offered you two bottles of whiskey. Its penny-wise and pound-foolish.

I hadn't seen they were asking for a retroactive carveout! For eight years. A decade's worth of massive, post facto tax clawback? I don't know who thought this was a good idea, but they really must not love YC or Hacker News, to put those names on the public face of this...
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