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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

#981

Post by rapidaneurism »

patapong wrote: post #935
rayiner wrote: post #828

Earlier quoted context omitted.

> In addition to the research costs, I'd also have to pay taxes on the research costs mostly up-front. Significantly, if the project doesn't work out, I'm still out of pocket for the tax money. That’s how it works for every business! If Jim Bean builds a distillation facility it has to amortize the investment in that over time. If the distillation facility doesn’t pan out, then it doesn’t get a refund for the taxes p…

In my (admittedly lay) understanding of the issue, it boils down to software maintenance being taxed as research and development. In general, costs for running a business (buying inventory) are immediately deductible, while establishing new business (building factories) has to be amortized, since the factory can be used for several years. In software, the line is a bit more blurry - coding creates new IP (research),…

Isn't the firing bit what has been happening?

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

#982

Post by justanotherjoe »

jmyeet wrote: post #38

I reject this framing. What really changed things was the end of ZIRP [1] and even then it was opportunistic. Labor costs are a massive cost for tech companies. They have continually tried to suppress wages. In the 2000s, it was the anti-poaching agreement between Steve Jobs, Eric Schmidt and others. In the 2010s, high growth ahnd zero interest meant labor costs continued to balloon. But then Covid came along and was…

I feel like I'm taking crazy pills reading this article. To me, the most obvious and earliest case of mass tech layoffs was the Twitter 50% layoff by Musk. The whole lines written fiasco. The lack of mention anywhere is gaslighting me. Couldn't that have been the precedent as well? We know the market hanged on his every word (at least in 2022).

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

#983

Post by OvbiousError »

systemf_omega wrote: post #609
warkdarrior wrote: post #97

Earlier quoted context omitted.

Software developers are already too expensive in US, so this applies some downward pressure on those salaries. Frankly the economy will be much better off when tech salaries equalize across geos, thus avoiding the deep whole US manufacturing is in (for example, manufacturing wages in Vietname are one tenth of US manufacturing wages, and thus it is better to open new plants there).

If you want equalized poverty, feel free to move to the EU. Say goodbye to owning a nice house, or building any kind of wealth - that's reserved for the old money class. In the US, software is one of the few remaining ways to achieve the American dream. I came to this country to work hard and earn money.

I'm in the EU. You have no idea what you're talking about.

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

#984

Post by shafyy »

cyberax wrote: post #212
shafyy wrote: post #162

Earlier quoted context omitted.

Jesus man, how can you look at the economic history of the past 30 years and still think neoliberalism is the way to go?

I used to think like you, until I saw what the lack of neoliberalism does to countries. And before I witnessed the magic of market economy that adapts to changes far, far, far better than anything else. If you want a static economy that supports gradual decline (preferably with a mineral-based income stream), then a lot of state spending is fine.

Being opposed to neoliberalism does not mean being opposed to free markets in general.

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

#985

Post by dashqueen »

subarctic wrote: post #89
demosthanos wrote: post #34

Earlier quoted context omitted.

Isn't this literally the content of the article? What you just wrote down is basically this paragraph from TFA: > And so, on schedule in 2022, the change to Section 174 went into effect. Companies filed their 2022 tax returns under the new rules in early 2023. And suddenly, R&D wasn’t a full, immediate write-off anymore. The tax benefits of salaries for engineers, product and project managers, data scientists, and ev…

Agreed that's literally what the article is about

Yes, I was joking around. I wrote the article. Unsuccessful attempt at humor.

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

#986

Post by azemetre »

systemf_omega wrote: post #970
azemetre wrote: post #643

Earlier quoted context omitted.

Weird, I live in the USA make $180k yet still can’t own a house and building wealth is extremely hard. EU has better societal benefits than the US (access to healthcare, education, mandated vacation time (often starting at 3-4 weeks). The vast majority of people care about living a life without suffering. In the US this is only reserved for the rich it seems.

What part of the country and what is your take home? Monthly expenses? $180k can be a lot depending on your location. Exceptions are HCOL tech hubs, but comp in those places is much higher.

I live in Boston where I make double(-ish) the household median income ($80k to $100k). For individual median incomes, I make $140k more. I'm able to save over half my monthly income and it's still not enough. I absolutely can't imagine living in this city on anything less and I don't exactly live a life of exuberance here.

This is the sign of a broken economy.

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

#987

Post by throwaway2037 »

bunnie wrote: post #902
rayiner wrote: post #828

Earlier quoted context omitted.

> In addition to the research costs, I'd also have to pay taxes on the research costs mostly up-front. Significantly, if the project doesn't work out, I'm still out of pocket for the tax money. That’s how it works for every business! If Jim Bean builds a distillation facility it has to amortize the investment in that over time. If the distillation facility doesn’t pan out, then it doesn’t get a refund for the taxes p…

The comparison with Jim Beam is misplaced. Both TSMC and Jim Beam already have to amortize their production equipment over several years. I'm not arguing that this should be changed. This is because the primary risk taken in a distillery build-out or a fab build-out is if there is market demand for a known product. It's primarily a business risk, not a research risk. Tax code is a reasonable tool to regulate business…

    > Both TSMC and Jim Beam already have to amortize their production equipment over several years. I'm not arguing that this should be changed. This is because the primary risk taken in a distillery build-out or a fab build-out is if there is market demand for a known product. It's primarily a *business* risk, not a *research* risk.
It is interesting that you think building a new state-of-the-art fab isn't a combination of both business and research risk. As I understand, the first X months (up to 2 years) of a fab's life is spent increasing yields. On day one, your semiconductor yields from manuf'd silicon wafers might be completely loss making. I have no idea how TSMC handles this tension between business and research risk when building a new fab. I am sure there is an army of tax lawyers who argue about how to categorize these expenses.

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

#988

Post by throwaway2037 »

jashmatthews wrote: post #664
hiatus wrote: post #627

Earlier quoted context omitted.

> That one is incompatible with copyright laws in many countries outside USA. How so? You can't sign away your interest in a copywrighted work?

The USA hasn’t managed to completely impose their idea of intellectual property on everyone yet. Some countries you can’t sign away authorship even if you can commercial rights.

I am unsure if I fully understand your point, so let me ask a related question to see if I understand.

For many open source projects, there is a CLA (contributor license agreement) that must be signed before contributions can be accepted. The Free Software Foundation (which holds the copyright for most/all? GNU tools) is pretty in/famous for requiring it. Their reasoning: If there are copyright violations, they have the time and financial resources to pursue the violators.

Are you saying that these CLAs and their intended purpose are invalid in some jurisdictions? If yes, please share some examples. To be clear: I'm only interested in "normal/regular" jurisdictions that have at least accepted the Berne Convention.

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

#989

Post by mring33621 »

mring33621 wrote: post #145
demosthanos wrote: post #73

Earlier quoted context omitted.

No, that's literally the Section 174 change. You now must count them as R&D. The relevant paragraph from Section 174: > (3) Software development > For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure. https://www.law.cornell.edu/uscode/text/26/174

what if you don't call it "software development"? how about "business process mechanization"?

OMG, I can't believe how prudish HN commenters are!

Have you seen who's leading the most powerful orgs these days?

Have you seen what's going on?

"business process mechanization" is a fair description of what we do and probably would be just fine, tax-wise

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