631–640 of 957 posts
Earlier quoted context omitted.
[flagged]
Yikes—you can't attack others like this here. I've banned the account. If you don't want to be banned on Hacker News, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html .
Earlier quoted context omitted.
These are studies designed to show positive results, and are susceptible to the criticism the parent identified. IRS enforcement has diminishing returns because the IRS starts with the small minority of people who are very obviously cheating on their taxes. Those people get audited and the IRS very easily recovers money from them. If you want to audit more people than that, you have to audit people who are less likel…
If you want to account for the social cost: moral hazard. Who pays taxes when it's well known that the IRS doesn't audit and follow up on tax cheats? Especially, if all it takes to further dissuade them is engineering complex wealth structures and keeping tax lawyers on retainer.
But they do. They always have. The question is, once they've done that, should then they proceed to audit an even larger number of mostly innocent people, because a small percentage of them did something wrong and finding that small percentage would cover the costs of the IRS, but not any of those other innocent people?
> Especially, if all it takes to further dissuade them is engineering complex wealth structures and keeping tax lawyers on retainer.
This is an entirely different problem. The ones with sophisticated lawyers aren't actually violating the tax code. The problem there is that the tax code is so complicated and poorly considered that fancy lawyers can find ways to avoid taxes without violating the law.
Earlier quoted context omitted.
These are studies designed to show positive results, and are susceptible to the criticism the parent identified. IRS enforcement has diminishing returns because the IRS starts with the small minority of people who are very obviously cheating on their taxes. Those people get audited and the IRS very easily recovers money from them. If you want to audit more people than that, you have to audit people who are less likel…
If you have been found to be cheating on your taxes, you should pay a fine that covers the cost of the audit.
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…
This description is misleading (as many of them seem to be), because you're only describing the first year. After 5 years of constant expenses, the deductions match the costs. If expenses diminish, deductions exceed costs. -> this is bad (in the short term) for companies that are growing.
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…
Correct me if I'm wrong, but if a company hires someone to say, mine coal or brew beer, the expense of those employees is an expense any company can claim a full tax deduction on. If you're a line chef or wait tables, your salary is tax deductible to the restaurant.
So it's not that we are asking for R&D to be treated "specially" and get a deduction that other companies don't have. The problem is that R&D salary expense is being singled out as producing an asset (e.g. IP), and thus being classified in the same category as other assets, like, brewing equipment, a mining excavator, or a pizza oven. Simply put, Section 174 argues to classify people in the same category as things because ... 'these people's work outputs may have long-term value, kind of like things'(?).
Allowing Sec 174 to stand is a slippery slope to classifying more and more everyday Americans' salaries into this category. One could argue in the future, for example, that those who design cars or operate machines to produce tooling dies, should not have their labor treated as regular expenses, but instead as capital assets because their labor output is captured in assets, just as Sec 174 treats the labor of software developers as assets. Everyday people should be concerned by this because if the rule stands, it could be extended to you, too.
For those objecting to the equal treatment of R&D employees as all other employees in America of all stripes and vocations, keep in mind that software people have to pay personal taxes on the income, just like everyone else. Section 174 doesn't have anything to do with personal income taxes: we all pay income taxes fair and square. The question is whether there is a double-tax on software labor, paid at the corporate level (and in all likelihood, your salary is currently a tax deduction for your company, unless you write software or do R&D).
I think the assumption that we are asking for "special treatment" is driving some confusion and grass-roots objection to the movement here, so I wanted to highlight that we are just asking for everyday people who work software and other R&D jobs to be treated just like every other American who works a day job.
[edits for clarity]
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…
Small correction, it was a vindictive move to negatively impact companies and regions that Trump didn't like (at the time).
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…
Wow, so there isn’t really a good faith steel man for this? They were just like, hey, we need to offset other cuts so let’s arbitrarily pick a high paying profession that, not so coincidentally doesn’t have a lot of influence in government, and let them take the hit?
I was under the impression that this was included in the current one big bill and will continue to be included. It’s not something we would expect to be removed.
The current one big bill does a 5 year reversion back to the old rules, and then goes back to the problem existing. So it is the same idea as the 2017 bill. See https://exactera.com/resources/what-one-big-beautiful-bill-a... for details. I will warn you, though, that the provisions are complicated enough that it is hard to read the article. The problem is that we don't know whether this will get fixed in that time fr…