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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

#881

Post by tempestn »

yieldcrv wrote: post #270
gigatexal wrote: post #253

Earlier 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…

Even if you're right, it's only true in the short term. Long term, everyone benefits from a sustainable country, and trillions of new debt isn't heading in that direction.

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

#882

Post by tempestn »

Hilift wrote: post #591
sampton wrote: post #133

Amortization 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.

> end of US software dominance. What is that? Software sold by companies that have HQ in the US? Or software created by someone in the US? Because if it is only the first, good riddance.

Based on the Shopify example in the article, it's the latter.

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

#883

Post by dummydummy1234 »

jameshart wrote: post #820
mcv wrote: post #792

Earlier quoted context omitted.

Wait, salary costs do not count as costs for the year they're made in? That is completely nuts, no matter what kind of company you have. Although for a startup it might be least bad, because for their first few years, their revenue might well be closer to zero; they tend to burn money, sometimes for quite a while.

They count as costs, but towards a capital expense. The expectation is that that expenditure resulted in the creation of a valuable asset (and not one which was sold for $200,000). Revenue: $200,000 Expenses: -$200,000 Assets: $200,000 Net income: $200,000 You’re allowed to say ‘ah, but over the year the value of that $200,000 asset actually fell by 1/5’: Asset depreciation: -$40,000 So your net income is now $160,00…

But no matter what you are doing, your not spending 100% of your time building a piece of software.

How does it work when a company uses salaried employees to build a structure. Are the salaried employees not deductible at all?

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

#884

Post by selimthegrim »

teitoklien wrote: post #869
ajmurmann wrote: post #499

Earlier quoted context omitted.

Because they are a patriot. If not why are they in politics..?! Whom am I kidding...

Back during the communist vs capitalism and free market era Politicians were patriotic like you hope them now to be, they were worried about the rise of communism and were extremely attentive and focused and unified to making sure capitalism and free market works for the masses, that everyday westerners are enriched and have better social and health outcomes than their communist counterparts. It did succeed to the po…

It was right before dissolution.

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

#885

Post by hnjobsearch »

lostlogin wrote: post #784
FrustratedMonky wrote: post #620

Earlier quoted context omitted.

too little too late? as we are seeing now on a number of issues, sure things can be rolled back, but that doesn't mean a return to normal. Yes, you can kick over a bee hive, then pick it up and set it back upright, but you are not going to put all the bees back in immediately. There are long term consequences.

Off topic! Having knocked over a beehive and got 50+ stings as they crawled up my trouser leg in the dark, I can confirm. When I got to bed, my heart was beating so hard that it kept my wife awake.

You went back to bed after being stung 50+ times by bees? That sounds like a medical emergency. I'm glad you are okay, but I'm amazed you were able to just shrug it off.

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

#886

Post by econ »

kmacdough wrote: post #749
dataflow wrote: post #731

Earlier quoted context omitted.

> The rule as written means contractors who write Windows drivers could deduct their expenses (as they would have no residual rights to a closed-source work product), but contractors who write Linux drivers may not (as they would have some rights to open-source Linux drivers). Is it just me or are you conflating two orthogonal things? An open-source Windows driver would have the same issue, no? And a closed-source pr…

I could see it being inferred that way but, the way I read it, they are not meant as unilateral facts. Rather, they serve as rhetorical examples of where you might find contractors doing similar work, but where the one more in service of "public good" is taxed higher because it's open source. Strictly speaking, Windows bits are not all closed source and there exist closed source Linux bits. But it's not a point that…

What would happen if closed source is [later] released as open?

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

#887

Post by nayuki »

mrweasel wrote: post #622
calderwoodra wrote: post #599

Earlier quoted context omitted.

I'm not an accountant, but as I understand it, you don't pay taxes on profits, but on revenue. So previously, some 20% of all revenue would be owned as corporate income tax, and startups would deduct it all as they're spending much more on R&D than they owe in corporate income tax. But with this tax change, the deduction would be much lower (80% lower IIUC).

If companies paid tax on revenue the US budget would be perfectly fine.

If companies paid tax on revenue, then there would be a tremendous incentive toward https://en.wikipedia.org/wiki/Vertical_integration , because you wouldn't be allowed to deduct the expenses paid to your suppliers.

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

#888

Post by yieldcrv »

virgildotcodes wrote: post #593
yieldcrv wrote: post #370

Earlier quoted context omitted.

I am very much in support of Section 174A no matter who does it, what riders goes alongside it, or what it was a rider to Congress can always pass anything else at any speed. This slow motion filibuster thing is a choice, and the powerlessness of doing anything about that choice just means everyone else should have a single they care about too to correct the laws and riders that shouldn’t have passed.

> no matter who does it, what riders goes alongside it, or what it was a rider to Really? You can’t think of anything you wouldn’t support in order to get this thing that benefits you?

the things I wouldn’t support don't have consensus

wont be in a reconciliation bill

wont be supported by the courts

and the rest of my observation about how Congress can deal with and has dealt with riders after the fact still stands

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

#889

Post by yieldcrv »

dclowd9901 wrote: post #451
yieldcrv wrote: post #270

Earlier quoted context omitted.

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 have to say that you sound very biased in the way you're talking about the bill. If a primary goal of this administration is to cut and make government more efficient, this bill is about as big of a failure as one could conceive. Any reasonable person would have to admit that. I'm fine admitting that I would benefit greatly from this bill. I also hope to heaven it doesn't pass because an additional trillion dollars…

Nobody likes everything in the bill, well since nobody knows everything in it I should say everyone has things they don't like about the bill

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

#890

Post by guyfromfargo »

wdaher wrote: post #56
svara wrote: post #46

> For cash-strapped companies, especially those not yet profitable, the result was a painful tax bill just as venture funding dried up and interest rates soared Can someone explain this? What taxes do unprofitable US businesses owe that this would be deducted against?

Here's a toy example that hopefully makes this clear: In 2024, your business has $1m in revenue and has $2m in expenses. 100% of these expenses are R&D salaries (engineers you hire.) Your company loses $1m/year. (You brought in $1m and spent $2m.) Under the old rules, you'd owe no tax because you were unprofitable. After Sec 174, what the IRS now says is: You had revenues of $1m. But you only had $400k in expenses (b…

I own a small SaaS and the numbers you presented are similar to my situation in 2023. I owed over $100k in Taxes and I’ve literally never had over $100k in my business or personal bank account.
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