[HN Gopher] Tell HN: Help restore the tax deduction for software...
___________________________________________________________________
Tell HN: Help restore the tax deduction for software dev in the US
(Section 174)
Companies building software in the US were hit hard a few years ago
when the tax code stopped allowing deduction of software dev
expenses. Now they have to be amortized over several years. HN has
had many discussions about this, including _The time bomb in the
tax code that 's fueling mass tech layoffs_ -
https://news.ycombinator.com/item?id=44180533 - (927 comments) a
few days ago. Other threads are listed at
https://news.ycombinator.com/item?id=44203869. There's currently a
major effort to get this change reversed. One of the people working
on it is YC's Luther Lowe
(https://news.ycombinator.com/user?id=itsluther). Luther has been
organizing YC alumni to urge lawmakers to support this reversal. I
asked him if we could do that on Hacker News too. He said yes--
hence this thread :) If you're a US taxpayer and if you agree that
software dev expenses should be deductible like they used to be,
please sign this letter to the relevant committee members:
https://docs.google.com/forms/d/1DkRGeef2e_tU2xf3TyEyd2JLlmZ....
(If you're not a US person, please don't sign the letter, since
lawmakers will only listen to feedback from taxpayers and we don't
want to dilute the signal.) I'm sure not everyone here agrees with
us--HN is a big community, there's no total agreement on anything--
but this issue has as close to a community consensus as HN gets, so
I think it makes sense to add our voices too. Luther will be
around to answer questions and hopefully HN can contribute to
getting this done!
Author : dang
Score : 1239 points
Date : 2025-06-09 16:28 UTC (6 hours ago)
| timr wrote:
| What should we do with the "company" field?
| Supermancho wrote:
| Unaffiliated or None, if you're gonna get in on it.
| vessenes wrote:
| Thanks for working on this guys. The current tax code is fairly
| crazy: you could spend a few million in salaries, sell 200k of
| software in a year and possibly owe taxes on that. Even if the
| company would otherwise be shutting down.
|
| The traditional capital asset treatment applied to software
| leaves a lot to be desired. Some software is a capital asset, but
| much just isn't. Or at least should be considered to depreciate
| rapidly.
| ndriscoll wrote:
| I would be surprised if nearly all software companies wouldn't
| consider their code to be a valuable capital asset. For
| example, do you think your company would be okay with releasing
| commits/snapshots of their source code and design docs into the
| public domain once they hit 5 years old? Or do they currently
| depreciate _too quickly_?
| Terr_ wrote:
| I don't think that framing really tells us much, because
| there could be many reasons _not_ to release that code that
| don 't indicate it's an asset, such as (A) worries it might
| have still-relevant security issues, (B) costs of scrubbing
| other information like employee PII, or (C) the code is _too
| useless_ to be worth the effort.
|
| If the goal is to measure retained value, I'd ask how much a
| competitor would pay to acquire your 5-year-old code (for
| direct use, not for hacking you) without feeling cheated
| afterwards.
| amluto wrote:
| Possibly more than it cost to develop in the first place,
| at least in some industries. Which might result in utterly
| absurd tax treatment.
| BJones12 wrote:
| I think companies view it as a trade secret. Whether or not
| that particular app is making money, regardless of how old it
| is, they don't want to release the code.
| freeone3000 wrote:
| Salaries are not generally considered "capital" - HR wording
| aside, you do not own your employees. It's an immediate
| expense that may, or may not, produce something of value.
|
| The IRS is using a theory of value where software (1) is a
| capital asset (okay, sure), (2) has a six-year deprecation
| schedule (uhhh why not 5 like everything else?), and (3) is
| valued at the exact cost of all inputs to it, including
| salaries (uh oh).
|
| This is unlike how capital assets are valued for any other
| industry! And it has the effect that hiring a second lawyer
| is "cheaper" (for five years anyway) than hiring a second
| developer.
| rectang wrote:
| > _(3) is valued at the exact cost of all inputs to it,
| including salaries (uh oh)._
|
| Thanks, that really gets at the heart of the issue.
|
| Are any other business processes and elements -- e.g.
| accounting mechanisms, print design, sales funnels --
| valued this way?
| cjbgkagh wrote:
| There could be a distinction between creating new value
| (greenfield), and maintaining existing value
| (brownfield). Most of my work is green field and I do
| consider it to be a capital asset, it's sweat equity as I
| don't pay myself, but I can't deduct my non-salary
| either. Others estimate the most of the software work is
| 95% brownfield.
|
| An other issue is competitiveness with other
| jurisdictions that don't have these tax laws, but even if
| that were normalized there are jurisdictions that are far
| lower tax in general regardless of the classification.
| marcosdumay wrote:
| > you do not own your employees
|
| Well, that framing is just wrong. The companies are paying
| taxes over what those employees created, not over the
| employees. Does the company own the software?
|
| > The IRS is using a theory of value where...
|
| Notice that all of your 3 points are exactly like any other
| kind of capital.
|
| Most countries exclude salaries from the income calculation
| because it has good practical consequences (both on making
| accounting cheaper and on incentivizing companies to hire),
| not because of any theoretical problem.
| sahila wrote:
| > This is unlike how capital assets are valued for any
| other industry!
|
| Is your dismay that it's unfair compared to other
| industries or that the policy doesn't reflect reality that
| software is a capital asset that has a lifetime longer than
| 6 years for many companies?
| demosthanos wrote:
| It's that it doesn't reflect the reality that the value
| of software is not remotely correlated with the salaries
| that were spent building it. It could be valued much
| higher or much lower, spanning a huge range.
|
| Using salaries as a proxy for value of the asset
| encourages only the safest shovelware bets, discouraging
| risk taking lest your asset be taxed at substantially
| higher than it's worth.
|
| Avoiding that risk-adverse dynamic is why Section 174 was
| written the way it was since the 50s to encourage R&D,
| and it's paid off in spades.
| thaumasiotes wrote:
| Well, a larger issue seems to be that this whole idea is
| premised on taxing an unrealized gain. If I create a
| painting, I don't owe any taxes on it until I sell it. If
| the world decides that I'm Picasso and my sneezing on a
| canvas means it's worth $50 million, it still won't be
| true that, after I sneeze without covering my mouth and
| some spittle lands on one of my blank canvases, a
| government official shows up to my house to force me to
| sell it so that I can pay the taxes I owe for creating
| it.
| sethherr wrote:
| While I understand the drawbacks, the current situation -
| where the ultra-wealthy don't pay taxes because all their
| wealth is in unrealized gain - is even worse
| thaumasiotes wrote:
| > the current situation - where the ultra-wealthy don't
| pay taxes because all their wealth is in unrealized gain
|
| This is neither the current situation nor even a
| theoretical possibility.
| vessenes wrote:
| Software just isn't a "capital asset" in the traditional
| sense. It might have a multi decade depreciation in real
| life, or it might be worthless shortly after writing. I
| mean, we live in a tax regime where a jet is 100%
| depreciable in the year its purchased. Srsly.
| demosthanos wrote:
| If you're ripping off a competitor, sure, the salaries of
| your engineers roughly translates to the value of the
| resulting capital asset. But the most valuable work that
| software engineers do is the stuff that has never been done
| before. The salaries of your developers and designers and
| your product managers go first towards figuring out what a
| valuable capital asset would look like. Only after that can
| you start investing in the actual asset.
|
| The same is true for all true R&D, which is why historically
| the government has tried to provide protections for R&D work
| to incentivize people to _not_ just churn out the safe bet
| over and over again. Patents fall into this category, but
| software patents are (rightly) hard to come by. Through 2022,
| the risk of software development was offset by the ability to
| expense the costs and avoid a tax bill, and this was good
| policy if your aim is to encourage innovation.
|
| The capital asset theory could still work if there were some
| way to appraise the value of the actual asset you created.
| But absent such a way, this thinking is deeply flawed for all
| but the most shovelware of jobs.
| thaumasiotes wrote:
| > If you're ripping off a competitor, sure, the salaries of
| your engineers roughly translates to the value of the
| resulting capital asset.
|
| I don't think this comes close to being true. It would make
| ripping off a competitor pointless.
| creato wrote:
| Even if true, a small fraction of engineering time on a
| project is actually developing that asset. The rest is
| maintenance and support. The tax code does allow for this
| distinction, but only if you track hours associated with each
| kind of work, which basically no one does. And even if they
| tried, it's difficult because that line is blurry. Tasks are
| rarely 100% one or the other. Ever fixed a bug by refactoring
| to make something better? Which kind of engineering is that?
| Can you justify that to the IRS accountant auditing you?
| wagwang wrote:
| Isnt this just false? I thought corporate taxes are levied on
| net income?
| ok_dad wrote:
| Have you read section 174? It forces software to be
| classified as R&D and then use a weird 6 year amortization
| (10-20-20-20-20-10) for the salary.
| wagwang wrote:
| Oh amortizing salary is kinda weird, I thought it meant
| like data center expenses must be amortized
| arcbyte wrote:
| Corporate taxes are indeed levied on net income _after
| expenses_. Trading money for capital assets is not considered
| expense.
|
| If you start the year with 0$ in your bank. After the end of
| the year you have made $200k in revenue. However you "spent"
| $200k on software salaries. However, because these are
| software costs, they must be depreciated over 5 years, so
| only 20% of that $200k software cost can be applied as
| depreciation cost which is considered an expense. So your net
| income for this year is $200k revenue - $20k depreciation
| expense = $180k. Your 15% tax on this is $27k.
|
| So you made $200k and spent all of it on software, so your
| bank account is 0, but you owe $27k in taxes.
| ndriscoll wrote:
| You do, however, have $160k worth of software that is
| generating ~$16k/mo in revenue (or more since you
| presumably did not make that $200k evenly spread out across
| year 1 while you were developing the software), so in year
| 2 you could halt further development, use a loan to get
| through the 2 months it takes to make the money to pay your
| taxes, and then make $176k profit. Then you pay your taxes
| on year 2 and walk away with $152k in the bank along with
| $120k worth of software asset.
|
| (Of course an asset that generates $200k/year is actually
| worth far more than $200k, so in that case 20% depreciation
| seems even more absurd)
| TZubiri wrote:
| This makes sense though.
| tash9 wrote:
| Correct but the point is that the salaries of the developers
| are not treated as an expense to net out, they are treated as
| an asset that depreciates over some period of time. (Even
| though some "developer" work might be day to day maintenance,
| rather than building a new feature.)
| jlokier wrote:
| Not when it comes to capital assets. The full cost of a large
| capital asset is generally not allowed to be treated as an
| expense for tax purposes.
|
| It's technically correct that tax is levied on "net income",
| but that's an accounting term which means something different
| from "money_in - money_out" when there are capital assets.
|
| One justification for this is, although you spent the cost,
| you received equivalent value in the form of the asset
| itself.
|
| This means if it costs $100k in salary to make software this
| year, and you get $30k in income from the software this year,
| your bank balance will lose $70k (which is expected) and
| you'll have negative income in the ordinary way of thinking,
| but you'll be charged income tax (which is new) despite
| losing money, as if you gained (almost) $30k instead of
| losing $70k.
|
| Your tax accounts will show an _increase_ in net assets,
| despite the _decrease_ in your bank balance, because they
| will show the software as being "worth" (almost) $100k,
| regardless of what it's really worth right now.
|
| This is particularly hard if you're a small company or (non-
| VC-funded) startup that's already stretching to cover the
| cost of speculative software development. Being charged
| income tax even while you're losing money developing software
| (in the ordinary way of thinking about money) is what's new
| in the tax code. It makes it harder than before to do
| speculative developments, making some kinds of development
| non-viable that were viable before.
| wodenokoto wrote:
| Other than it's nice not to have your profession taxed, what is
| the argument that software development shouldn't be taxed as
| opposed to all sorts of other white collar work?
| nluken wrote:
| The exact law is a bit more nuanced than a "tax deduction for
| software engineering", but I'm guessing OP put it that way
| because it makes for a snappier title on a SWE heavy forum like
| this one. I would check one of the threads that OP posted for
| more specific information on how the tax code changed a few
| years ago.
| lazide wrote:
| The proposal isn't that it not be taxed. Rather that software
| dev be taxed like an expense, which is easy to track and
| rationalize, as compared to a capital improvement which is much
| harder to do so.
| kevin42 wrote:
| It's not a matter of whether it's taxed. It's a matter of how
| the costs are expensed. If I invest a $1m in software
| development now, I'm not making any profit yet. I may not make
| a profit. It's a question over whether I need to pay taxes on
| potential future profit now.
| 0xffff2 wrote:
| Forgive me for knowing next to nothing about how business
| taxes work, but if I invest $1m in software development,
| haven't I just _spent_ money? Why would I get taxed on
| spending?
| xnorswap wrote:
| The UK has (had) a tax credit for "Research and Development",
| intended to be a tax break for genuine R&D, but of course
| everyone lumped all software development into.
|
| The UK eventually put out guidance that business as usual
| development isn't really "research and development", but afaik
| there hasn't been a serious crackdown on the practice.
|
| It seems kind of absurd to pretend that most work that
| developers do is pioneering the profession.
|
| R&D tax breaks make sense, both to encourage genuine research
| but also to prevent brain-drain.
|
| Not taxing (or tax credits / refunds ) for line-of-business
| software isn't really excusable.
|
| It's bad that the law in the US has been changed in a cliff-
| edge way though.
| gadders wrote:
| I've been questioned on whether systems I had a hand in would
| qualify for the R&D credits. Someone not particularly close
| to it had thought it might, but I explained to our external
| assessors that it didn't and they agreed with that.
| CamouflagedKiwi wrote:
| I've dealt with this at a previous employer (where we did try
| to be reasonably honest and submitted things that had some
| R&D element, I can imagine a less principled approach). The
| concept of it seems sensible, in practice you end up
| justifying why something is R&D to essentially non-technical
| people, probably at some consultancy who can then repeat a
| moderately garbled version of your description to HMRC who
| presumably just approve in most cases because they also don't
| have the expertise to truly assess the subject matter (and
| let's face it, we'd all struggle, even if we believe we're
| expert software engineers, how do you assess whether work on
| a mortgage issuing product for a bank is truly R&D if you
| have no familiarity with the domain).
| __s wrote:
| https://news.ycombinator.com/item?id=44204565
|
| Software is being singled out
| triceratops wrote:
| I don't think you understand the post.
| londons_explore wrote:
| This isn't changing if it is taxed or not. It is merely about
| if the tax should be paid in the year the work was done, or
| spread over the 5 years after the work was done.
| hadlock wrote:
| Try explaining that to a startup with less than 5 years of
| runway left.
| rbultje wrote:
| > This isn't changing if it is taxed or not.
|
| This is untrue. The rule is not about taxation, but
| deductions/expenses. If your expenses cover most revenue, you
| owe little in taxes. With this rule, a particular type of
| expense (software engineering salaries) is no longer
| deductible from revenue to calculate taxable income over
| which taxes are owed. So you might previously owe no taxes,
| but now you do. The deduction might carry over to the next
| few years and eventually (after 6 years) you will reach the
| same point - assuming your salaries don't go up and your
| business doesn't grow. The remainder in deductions will be
| returned after the business stops employing software
| engineers. I'm not sure why anyone would want the tax code to
| incentivize a business outcome that all of us would consider
| failure.
| TimPC wrote:
| Almost all work is tax deductible. This isn't just for software
| developers and employees still pay taxes. The issue is software
| development is being classified as research which is one of the
| few areas where salaries aren't directly deductible but instead
| need to be deducted in pieces over five years.
| wagwang wrote:
| > Almost all work is tax deductible
|
| What really? How does this work.
| toomim wrote:
| Proft = income - expense.
|
| When you pay people to get work done for a business, that
| paid work is an expense.
|
| You can deduct expenses from your income to calculate your
| profits.
|
| IIRC the problem is that software development is not being
| classified as an _operating_ expense, now, but rather a
| "research" _capital_ expense, and the deductions then have
| to be amortized over a number of years.
| rbultje wrote:
| You're confusing corporate vs personal taxes. The salaries
| businesses pay are meant to be deductible business
| expenses. The business only pays taxes over the profit
| after these expenses are deducted from their revenue. The
| person receiving the salary still owes personal taxes over
| the income.
| runako wrote:
| Company earns $X revenue.
|
| Company pays staff $Y in compensation to earn that revenue.
|
| Company pays other expenses of $Z.
|
| Company does not owe tax on $X, but rather on something
| closer to $X - $Y - $Z.
| runako wrote:
| > other white collar work
|
| Some examples of white collar work that builds long-lived
| assets but where the work isn't required to be amortized over
| long periods of time:
|
| - marketing collateral development, unless it is done by
| engineers
|
| - development of standard legal documents like contracts
|
| - development of HR policy
|
| - development of financial processes & associated reporting,
| unless done by engineers
|
| - art development (e.g. for packaging and other collateral)
|
| - building customer lists, unless it is done through software
| by engineers
|
| - developing service offerings (e.g. Costco membership)
|
| Software is not fundamentally different than any of these other
| white-collar assets that are used to build companies, except
| that it typically requires more ongoing maintenance.
| edoceo wrote:
| Maintenance and bug-fixes seem to be outside the R&D rules,
| so that expense would be 100% deductible in the year charged.
| demosthanos wrote:
| I posted a short explanation here [0] on the thread the other
| day, but the even shorter explanation is that "software
| development shouldn't be taxed" is not an accurate description
| of what repealing the change to Section 174 would do. This
| discussion has nothing to do with what work gets taxed (all
| profit is taxed no matter the industry) and everything to do
| with what counts as "profit".
|
| The Section 174 changes altered the accounting method that
| software development companies must use for calculating their
| profit for tax purposes. Starting in 2022 software dev must be
| treated not as an expense but as an investment in an asset,
| such that you're now required to amortize the expense over 5
| years instead of deducting it from your revenue the year you
| spent the money.
|
| The gigantic problem with this change is that without the
| ability to expense software development expenses as expenses, a
| new software startup can very easily be considered profitable
| in their first year because only 10% of their software
| development-related expenses get to be counted as expenses.
|
| And note that, contrary to what you say, _most_ white-collar
| work is _not_ treated this way, and software is further singled
| out from other R &D-type work in that it is the _only_ type of
| work that is explicitly called out in the section as being
| required to be marked as R &D. So we're not asking for software
| to be treated specially, we're asking why it suddenly changed
| in 2022 to be treated specially in an extremely negative way.
|
| [0] https://news.ycombinator.com/item?id=44204565
| adrianmonk wrote:
| That's not the issue. What people are asking for _is_ for
| software to be treated like every other profession.
|
| That's how it should be, and that's also how it actually was
| until relatively recently. A new law went into effect that
| treats software differently. I believe Congress was looking for
| an easy way to generate extra tax revenue by tapping into the
| wealth of rich tech giants. Whatever the intent, the workers
| ended up being the ones who suffer because now hiring people
| has worse tax consequences than it used to.
|
| So all that people want is to undo that, to take away that
| special rule that applies only to software, and put it back
| like it was.
| Mistletoe wrote:
| What is a software dev expense and why should it be tax
| deductible?
| TimPC wrote:
| Because employee salaries are normally deductible as an expense
| for companies which generally pay taxes on something resembling
| profit rather than something resembling revenue. The issue is
| they are classifying software development as a research
| activity so the salary has to be amortized over five years with
| 20% of the expense applying in each of the five years.
| wulfgarbet wrote:
| When a company that earns $150k/yr and hires a software
| engineer who costs $100k/yr, that company should be able to
| deduct that salary in full.
|
| The way it works today they must amortize it, taking only 20%
| per year. So they'd owe taxes on $130k of $150k, instead of the
| more rational $50k of $150k.
|
| This effort is to restore rationality.
| Mistletoe wrote:
| Why was the change made to amortize the tax?
| kbolino wrote:
| To bypass the filibuster.
|
| To pass a bill the normal way, you need 60% of the Senate
| to agree. But certain kinds of bills can be passed through
| "reconciliation" which only needs a simple majority. Such
| bills must be "budget neutral" as assessed by the CBO. So
| legislators throw in hacks like Section 174 in order to
| game the system and offset other provisions they actually
| want.
| NaOH wrote:
| Here's more information on the Reconciliation Process for
| anyone interested.
|
| PDF: https://www.congress.gov/crs_external_products/R/PDF
| /R48444/...
| pinkmuffinere wrote:
| Disclaimer: I'm not an expert, just vaguely interested.
|
| My understanding is that previously, software dev salaries
| would be counted as a business expense in the year they are
| paid. Now they are amortized over X years on the tax paperwork.
| As a result, a lot of software companies suddenly show
| relatively high income, and have a large increase in their tax
| burden. This is especially hard for startups that were "on the
| edge" of making it. If the salaries go back to being an expense
| in the year the salary is paid, the tax burden will decrease
| again, because apparent company income will be less.
| triceratops wrote:
| > What is a software dev expense
|
| You might be more familiar with the term "salary and benefits".
|
| > why should it be tax deductible?
|
| Business expenses are tax deductible.
| zdragnar wrote:
| In any other company, employee salaries are counted as an
| operating expense against revenue, much like raw materials,
| utility bills, etc.
|
| If you sell $100 of goods and you have $100 of expenses, you
| have $0 net income and owe no taxes as a company- you've made
| no money!
|
| Because software salaries are counted as research and
| development, and 174 forces you to amortize the expense over
| five years, you are now in a much harder position:
|
| You sell $100 worth of software and have $100 of developer
| salaries. You haven't made any money, and you have $0 in your
| bank account. The government compels you to not expense more
| than $20 of those salaries, and taxes the remaining $80 of
| revenue. You are now bankrupt.
| socalgal2 wrote:
| I signed the petition but I wanted to offer an some
| background for an alternate POV (that I think I mostly
| disagree with).
|
| You have $600k in the bank. You hire 4 people to build a
| house. The materials for the house cost $200k and the 4
| people cost $400k. Total expenses $600k and you now have $0
| in your bank. You can deduct $600k in expenses, but!, you now
| have a house worth $$$$. You have to pay taxes on this house
| as it's an asset and worth $$$$. Your total worth is not $0
| (your bank account). It's $0 + the house.
|
| Change house to software. You created something new. The
| government is claiming that something, software or house, is
| worth $$$$
|
| I see the point. I have no idea how to value software. I
| guess the gov might say, to find the value, delete the
| software, how much would it cost for you to replace it (as
| one idea)
|
| Similarly with other expenses. You have $200k. You hire
| office workers at $95k each to do some work and buy two $5k
| PCs for them to use. At the end of the year you have $0 in
| the bank. The law sees it as you have $0 in the bank + two
| $5k computers. You owe taxes on that $10k (the 2 computers).
| For these, you're allowed to deprecate them 5 years. So you
| own taxes on $8k.
|
| Note: this issue of equipment being deprecated has killed
| lots of small businesses, mostly because they are new and
| unaware (been there (T_T)). If you buy $100k of equipment
| (furniture deprecates over 7 years), you budgeted $1m for the
| year with $0 left over (making a product that takes 2-3 years
| to finish) but you've got to pay taxes on ~80% of the $100k
| of equipment even though you thought you'd made no money.
|
| Many business opt to lease computers (and furniture?). This
| way they don't own it so it's not an asset and they can
| expense 100%. Unfortunately if you're a new startup no one
| will lease to you as you have no credit history (been there
| (T_T))
|
| Under the new rules, on the ~3yr software project (like a
| game) with $1m per year budget, after the first year you'd
| owe taxes on $1m because you could not deduct any salary
| expenses. All of your employees are doing software dev by the
| definitions of the new tax law.
| zdragnar wrote:
| I don't think it is reasonable to use employee salaries as
| the measure of market value. Companies buy and sell other
| companies based on performance, not cost to build.
|
| Employees are an operating expense.
| Salgat wrote:
| Maybe we should focus on fixing H1B first?
| Jabrov wrote:
| What's wrong with H-1B?
| KerrAvon wrote:
| I'm going to preface this by saying that I support broad
| liberalization of border controls; immigrants are the
| backbone of the USA, the engine on which we run, and we
| should encourage immigration and make it easy for immigrants
| to settle here. We have the space and resources; anyone who
| tells you otherwise is lying to you for political gain.
|
| So, that said: H-1B shouldn't exist for software. The point
| of it is to fill jobs that cannot be filled by an American
| for some reason; a condition that doesn't exist in software
| development. Hire immigrants as software engineers, fine. But
| find a way to do it that isn't bullshit.
| SV_BubbleTime wrote:
| Hmm, I thought Americans were the backbone of the USA.
| AndriyKunitsyn wrote:
| It's a lottery with ~1/3 winning chance.
|
| I'd say most of foreign devs in the US are actually L-1 that
| is actually worse because L-1 prohibits the dev from changing
| jobs unless the dev gets a new visa.
| varispeed wrote:
| It's subsidy for big corporations so they can get cheap
| talent whilst removing incentives for domestic workers to
| learn the trade or upskill. You also get more people
| competing for resources which means higher prices. Quality of
| life going down whilst corporations getting richer.
| andrewl-hn wrote:
| AFAIK there are a handful of companies that gobble the whole
| yearly allowance of H1B visas among them. Usual suspects are
| BigTech and large consulting groups. The later act as
| intermediaries: they sell worker hours at a higher rate,
| skimming the difference between their prices and employee's
| salary. If they were somehow barred from H1B program the H1B
| visa holders would presumably find better paying jobs
| elsewhere.
|
| H1B rules around changing jobs means that even if the
| employee joins at a market-level salary when they come to the
| US, they tent to stay at the same company much longer and can
| be exploited. The new company has to go through a lengthy
| paperwork process to allow the visa holder to switch jobs.
| Also, since the tech world tends to use things like stock
| options / RSUs / monetary bonuses for large parts of
| compensation package and those do not count towards "salary"
| you may have a situation where an h1b holder on paper seems
| to be paid fairly but in practice get only about 40-50% of
| what their peers get.
|
| If they were allowed to change jobs freely they would be able
| to negotiate their compensation fairly. The companies would
| be less intensified to hire H1Bs to save money and would also
| consider local talent for same positions. Everybody would
| win: both H1B visa holders and their families _and_ American
| workers, too. The only losers would be consulting firms (not
| a huge loss, to be honest, most of their employees are
| overseas anyway, so the can absorb the cost) and BigTech
| (they have enough money, anyway).
|
| There are other problems for H1B holders, like getting a
| green card is something their employer, and not them, can do
| - another area for abuse. And then some nationalities have to
| wait much longer to go through this process then others
| (essentially, the US migration service says that the country
| has too many people from India and Pakistan already, thank
| you very much), and there are other issues I don't recall.
| SV_BubbleTime wrote:
| Cognizant... we're importing a ton of labor to make sales
| force modules work with each other.
| triceratops wrote:
| Is H1B a tax issue?
| meepmorp wrote:
| maybe we can do more than one thing at a time
| stego-tech wrote:
| I'm all for reverting that part of the tax code, but only on the
| condition that it's inapplicable to H-1B visa or foreign worker
| salaries/payments, provided that employer pays local taxes in
| those countries for those roles.
|
| Keep good paying jobs in the USA. If we need immigrant labor,
| give them Green Cards instead of precarity.
| lazide wrote:
| The whole point is leverage/precarity.
| stego-tech wrote:
| I make said argument _fully aware_ of the point of such
| schemes. It's why I suggested, "You know, this is a good
| opportunity to rebalance the scales somewhat by utilizing a
| shared goal to extract reasonable concessions."
| lazide wrote:
| My point is the entire point of them is to extract
| _unreasonable_ concessions.
|
| The math has only shifted even more favorably for
| extracting even more unreasonable concessions too.
|
| Or do you think there is a sudden lack of Indian H1B
| applicants? Or that tech workers suddenly have more
| political power than they previously did?
| stego-tech wrote:
| I think any idiot with two functioning neurons can see
| the ruling class of India is trying to pull the same
| strategy China used to take manufacturing: consistently
| undercut foreign wages, centralizing knowledge and power
| before turning it on their customers and extracting
| wealth and power from countries or organizations that
| outsourced to them in the first place. I think it's less
| a matter of who has more or less power, and more that
| there is an opportunity here for reconciliation in a way
| that most sides benefit to some significant degree.
|
| * Foreign workers in the USA have more earning potential
| under such a compromise, allowing them to send more money
| home or bring family members abroad
|
| * Foreign workers abroad see less exploitation and have
| more impact on domestic policies and industry
|
| * Domestic workers see a slowing or reversal of
| outsourcing, increasing wages and job prospects
|
| * Corporate leaders hold off another over-centralization
| of power by another hostile state, retaining agency and
| profits for themselves.
|
| "The math" is not the be-all-end-all of things, for if it
| were we would have never lowered taxes as low as we did,
| enacted debilitatingly unsustainable defined-benefits
| programs like many pensions and Social Security, or
| handed out corporate subsidies as if money was free. "The
| math" paints a clear outcome of the current path that
| harms the collective peoples of multiple countries just
| so a handful of monied-classes can reap most of the
| rewards for themselves.
|
| Stop relying solely on short-term data with limited
| constraints, or big data patterns absent context. Do some
| critical thinking and path predictions, and these sorts
| of answers become pretty glaringly obvious, as does the
| ability for a unique compromise to head things off now
| instead of a full-on hostile protectionist agenda if this
| is left unresolved.
| lazide wrote:
| The framing of your quote seems to think that people who
| are clearly not in charge, are the ones in charge that
| can do something about it eh?
|
| Or, frankly, that if the people who are not currently in
| charge were put in charge, something different would be
| happening.
|
| It seems rather silly, frankly.
| triceratops wrote:
| > provided that employer pays local taxes in those countries
| for those roles.
|
| This was phrased a bit confusingly, at least to me. Can you
| explain?
| stego-tech wrote:
| It's a double taxation thing. If the employer is paying taxes
| abroad (as in, a net positive payment to that country's tax
| collection agency), then we should absolutely give them the
| IRS break on labor here; if they're _not_ paying taxes
| abroad, then they're taxed on said labor here.
|
| The idea is to reduce offshoring as a means of dodging tax
| liability for multinational firms. If they want the tax cut
| here, they gotta pay up everywhere else they do business.
| triceratops wrote:
| > if they're not paying taxes abroad, then they're taxed on
| said labor here.
|
| Ah I see. You mean if the effective tax rate for a worker
| in some country is 20% but the effective rate in the US
| would have been 30% they have to pay the difference in the
| US? Interesting idea but if the salaries overseas are much
| lower, how much revenue will that extra 10% raise anyway?
| More likely the worker would fall into a lower US tax
| bracket.
|
| I wouldn't mind seeing something like that for corporate
| profits actually.
| gadders wrote:
| Exactly this. If the aim is to bring back physical
| manufacturing, bring back software "manufacturing" as well.
| op00to wrote:
| > Keep good paying jobs in the USA
|
| Uh oh!
|
| > give them Green Cards instead of precarity
|
| Oh, right, yes! :D You had me for a minute.
| stego-tech wrote:
| If we're being honest, _every_ country should want to
| preserve high paying jobs for its citizens. Citizens that get
| paid well have more spending money, which drives domestic
| economic growth, which creates more jobs...you get the idea.
|
| Outsourcing and exploitative visas are a negative feedback
| loop that shrinks the actual economy vis a vis stagnant or
| decreasing wages and higher employment precarity. To have a
| healthy domestic economy, domestic employment must be
| prioritized.
| pj_mukh wrote:
| "If we need immigrant labor, give them Green Cards instead of
| precarity."
|
| This is counter-intuitive but absolutely the right answer.
| Giving immigrant employees full bargaining power will murder
| H1B mills. And no waiting periods in precarious limbo either.
| If you want an immigrant worker, they automatically get all
| bargaining power as an American and then you make your decision
| based on the market forces.
| abeppu wrote:
| > Keep good paying jobs in the USA. If we need immigrant labor,
| give them Green Cards instead of precarity.
|
| I'm all for giving more people a faster path to a green card if
| they want it.
|
| But should a person really have to get permanent resident
| status to have a decent job here? If someone wants to work for
| a few years in the tech industry in the US but expects that
| they may want to go back to their home country (or another
| country), and if they and their employer pay the appropriate
| taxes, what's wrong with that? Similarly, if I as an American
| citizen wanted to work abroad for some period without having
| pre-decided to become a permanent resident ... why is that
| harmful?
| stego-tech wrote:
| That's the neat part of the Permanent Residency (Green) card:
| you don't _have_ to stay forever. What that change does is
| destroy outsourcing and H1B visa mills by forcing employers
| to hire domestically first, and actually go through the
| process of sponsoring an immigrant's Green Card if they want
| to hire cheaper foreign labor.
|
| It does not deter expats, it protects them from exploitation
| and abuse by employers.
| abeppu wrote:
| Sure, and a hunting license doesn't require you to shoot
| anything but it would be weird to oblige you to get one if
| you don't have an intention of hunting?
|
| If green cards are easier to get, then the people that want
| them, and who you seem interested in protecting from abuse
| and exploitation can choose to apply for them -- great! It
| would have this effect even if you don't require every
| employee to have a permanent residence rights.
|
| If you create the requirement where only someone with
| permanent resident status can be hired, but you don't make
| green cards actually easier to get, then you've just put in
| some protectionist/nativist barrier.
|
| But if someone doesn't necessarily want to be a permanent
| resident, but does meet some other work visa, and an
| employer wants to hire them, you're just creating an extra
| bureaucratic obstacle for them, and claiming that it's for
| their benefit.
| stego-tech wrote:
| The entire point of a work visa is enforced precarity for
| the benefit of the employer at the expense of the worker.
| I do not know how to make that concept any clearer.
|
| If an employer wants someone to work in Country A, then
| they should be hiring domestically first; if they cannot
| find someone in Country A and want to hire someone from
| Country B, then that job is necessary enough that a
| Permanent Residency permit should be a non-issue for the
| employer and employee alike.
|
| It _really is_ that simple. If a job cannot be done on
| domestic wages then it's not a job that needs doing in
| the first place.
| vasco wrote:
| > but this issue has as close to a community consensus as HN gets
|
| Curious how this is assessed of you could share?
| dang wrote:
| The number of threads and the comments in those threads.
|
| e.g. from a few days ago:
|
| https://news.ycombinator.com/item?id=44208063
|
| https://news.ycombinator.com/item?id=44208875
|
| https://news.ycombinator.com/item?id=44207240
|
| https://news.ycombinator.com/item?id=44205579
|
| https://news.ycombinator.com/item?id=44205479
|
| https://news.ycombinator.com/item?id=44204864
|
| https://news.ycombinator.com/item?id=44204808
|
| https://news.ycombinator.com/item?id=44188578
|
| I realize listing a few examples doesn't prove anything, but
| when I've skim these threads, I see lots of comments like that
| and few counterarguments. Hence my impression.
| vasco wrote:
| Thanks - interesting to focus on tax cuts for the already
| rich but I guess it does make sense if the people here want
| it.
| jayunit wrote:
| The top of the form says "[Letter text -- Please sign by June
| 4!]" -- is it still helpful to sign?
| dang wrote:
| Oh yes it's still helpful - that date must be from an earlier
| version of the letter. We'll fix it!
|
| (And thanks-- I can't believe I missed that!)
| lostdog wrote:
| Interesting that YC is jumping on this tax code thing, but the
| shitty tax situation for employees trying to hold onto the equity
| they've earned is just ignored.
|
| The number one problem for startup employees is that the AMT tax
| makes it impossible to exercise options in a company that is
| doing well. YC is showing us that they will fight for changes to
| the tax code when it benefits their bottom line directly, but are
| silent when it comes to helping startup employees hold onto
| equity that they have earned.
|
| Think carefully before joining a YC startup as an employee.
| dang wrote:
| It's possible to care about more than one thing. Who doesn't?
| lostdog wrote:
| Yes, it is possible to care about more than one thing.
|
| YC was founded more than 20 years ago, and I don't recall any
| lobbying on the issue of employee tax treatment. If they do
| care about this they are being super quiet about it.
| SV_BubbleTime wrote:
| H1B posts when?
| lisper wrote:
| It's much worse than that. The whole US tax system is severely
| regressive, with labor paying up to 50% incremental rate if
| your income is low enough, and return on capital paying as
| little as zero if you have enough of it.
| deadbabe wrote:
| Can't you just exercise early to avoid AMT?
| lostdog wrote:
| Once a startup hits series A, early exercise is often $X0,000
| and a lot of people cannot afford to take a speculative bet
| with that kind of money.
| deadbabe wrote:
| But for the ones who can, it is a solution.
| robomartin wrote:
| Signed.
|
| That said, here's my perspective on 174 (which should be reverted
| to full deduction on the year the expense is incurred).
|
| You do not have to amortize 100% of your engineering costs. Not
| even close.
|
| Here's the key: Development costs incurred to
| remove uncertainty are amortized. All other costs are
| deductible during the tax year where they are incurred.
|
| How does this work?
|
| You are going to design a new robot arm.
|
| In January, you spend $100K to "remove uncertainty". In rough
| strokes, this means discovering all the things you don't know and
| need to know for this robot arm to become a product. This amount
| will be amortized over five years under 174.
|
| Now, with uncertainty removed, you spend an additional $1.1MM
| from January until December for engineering implementation. No
| uncertainty being removed. Just building a product. This is 100%
| deductible that tax year.
|
| Analogy: You want to build a new brick wall with specific
| properties. You spend $100K to develop a new type of brick and
| $1.1MM to build the wall using that brick. The $100K is
| amortized, the $1.1MM is deductible in one shot.
|
| BTW, at year 6 the amortization schedule reaches steady-state and
| you are amortizing the full $100K every year. In other words, the
| impact of 174, if treated intelligently, is the time value of
| money until steady state is reached for the engineering costs
| incurred to remove uncertainty.
|
| https://www.law.cornell.edu/cfr/text/26/1.174-2
| jonas21 wrote:
| If it's software, you do need to amortize 100%. Section 174 (as
| amended by the TCJA) has specific language to this effect [1]:
|
| > _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._
|
| i.e. it needs to be amortized. That's the part that people find
| most objectionable -- software development is special-cased for
| unfavorable tax treatment that does not apply to other fields.
|
| [1] https://uscode.house.gov/view.xhtml?req=granuleid:USC-
| prelim...
| robomartin wrote:
| I firmly believe 174 has to be repealed. Like many bills and
| regulatory overreach in the US, 174 does not promote and
| support entrepreneurship, risk-taking, investment, etc.
|
| All I am saying in my prior comment is that clever treatment
| of your engineering costs can improve tax outcomes. We have
| done just this --under the guidance of our tax attorneys--
| and have had no problems at all.
|
| Of course, a company that is a pure software enterprise and
| not multi-disciplinary, like us, is, well screwed.
|
| Keep in mind that at year 6 you are effectively deducting
| your full R&D costs, even for a pure software company. The
| real cost is the TVM due to the phase shift, at year six you
| reach steady state (assuming steady costs).
| deadbabe wrote:
| Could you use the vibe coding loophole to eliminate all
| uncertainty: the AI has the answers you need you just need to
| develop by continuously prompting and reviewing until the
| solution is ready for production?
| robomartin wrote:
| These are questions for a tax attorney.
|
| If you are a pure software company (no hardware or other
| activities) your options are rather limited.
|
| Also, as I said in other posts, at year six you reach steady-
| state and are amortizing the full amount every year. Example:
| amortization for each year R&D year
| 1 year 2 year 3 year 4 year 5 year 6 year 1
| 1,000,000 100,000 200,000 200,000 200,000 200,000
| 100,000 year 2 1,000,000 100,000 200,000
| 200,000 200,000 200,000 year 3 1,000,000
| 100,000 200,000 200,000 200,000 year 4
| 1,000,000 100,000 200,000
| 200,000 year 5 1,000,000
| 100,000 200,000 year 6 1,000,000
| 100,000 total
| amortization: 100,000 300,000 500,000 700,000 900,000
| 1,000,000
|
| Not ideal, of course, but if you are not a "flash in the pan"
| company, at year 6 it feels like this rule doesn't exist,
| other words, you are amortizing the full $1MM every year. The
| TVM on the deductions you could not take until steady-state
| is reached is part of the hit you take. The other is taxes on
| profits from operations during the early years.
|
| Most companies don't have profits rise exponentially during
| the first few years, so it might not be too bad. Also, there
| are many ways to mitigate this. For example, section 179,
| which allows businesses to deduct the full purchase price of
| qualifying equipment and software in the year it's put into
| service, rather than depreciating it over several years. In
| other words, instead of paying taxes on your profits, use
| that money to buy GPU's computers, tools or whatever you
| might need. Easy.
|
| A tax attorney is essential if you want to minimize tax
| liabilities intelligently and within the bounds of the law.
|
| But, yes, 174 needs to go back to full annual deductions.
| varsketiz wrote:
| Somehow I'm not a fan of HN using this community for lobbyism
| purposes.
| dang wrote:
| pg used to do it semi-regularly, especially on internet freedom
| isssues (edit: and software patents, IIRC), so arguably this is
| getting back to HN's roots.
|
| I remember he did an anti-SOPA thing on HN which involved some
| kind of banner at the top of the frontpage. It's probably saved
| at archive.org somewhere.
| varsketiz wrote:
| I guess I understand internet freedom causes better. Also,
| they are universal worldwide, this is USA specific
| jandrewrogers wrote:
| It affects any software developers worldwide that work for
| US companies. The specific tax law is even worse for
| foreign developers, since it requires amortization of non-
| American software developer expenses over 15 years instead
| of 5 years. How much code is written that retains its value
| for 15 years?
| varsketiz wrote:
| Probably less than 1%.
| mmooss wrote:
| > internet freedom isssues
|
| Freedom - an essential public good - is much different than
| using HN for lobbying for tax policy that favors YC.
|
| You know that doing this is a big change. Why not be
| straightforward about it - including whose idea it is, what
| the parameters are, what the new policy is, etc.? If you feel
| you can't or feel hesitant, then you know something is wrong.
|
| It changes the nature of HN in my mind, to something
| manipulative - not unlike other social media, and not unlike
| the trend in other businesses who embrace manipulation to
| greater and greater degrees.
|
| We each have a personal responsibility to the world, as
| adults, to stand up for essential values. If we don't, in
| each of our communities, workplaces, and homes, who will? We
| are the only ones here; we aren't kids (not that you said we
| are, but to clarify the point) who can destroy things and
| leave it to the adults; nobody else will come in and save us.
|
| > getting back to HN's roots
|
| You can see a lot of companies and politicians using that -
| find some historical precedent and claim that is the 'roots'.
| There are many more roots then that.
| jasonthorsness wrote:
| But who is advocating against this reform? Lobbying against
| stupidity should be generally acceptable.
| mmooss wrote:
| It has nothing to do with 'stupidty'. There are many other
| stupid things in the world - many much more consequential
| than tax policy and which are also discussed on HN. Where is
| the lobbying for those issues?
| niam wrote:
| May I ask why?
|
| It's expressly the intention of democracies to hear from
| constituents (and conversely: groups of constituents). That we
| happen to call that feedback loop "lobbying", and that the term
| carries some societal baggage from corporations using/abusing
| it is unfortunate, but shouldn't be an indictment of what is
| otherwise a democratic function.
|
| Some group FOO with a shared ill should be able to convene
| about it and petition congress about it.
| varsketiz wrote:
| Good question. I'm not certain myself why. I am not from the
| USA, so I don't see how it affects me. Also, probably
| unfounded, but I am somehow suspicious if this is for the
| benefit of software developers, or billionaires.
| chasd00 wrote:
| The main issue to me is now every political issue that isn't
| raised here makes HN complicit in its success/failure. Once
| HN starts down this path it can only continue and accelerate
| or else face accusations of support/opposition through
| silence.
| sdg3Q5g wrote:
| Isn't this tied to the budget bill ("One Big Ugly Bill") that
| effectively removes the last way federal judge's can hold anyone
| in the Trump admin accountable?
| andrewmcwatters wrote:
| Yes, but with strong exceptions against offshoring software
| development labor and H-1B abuse.
|
| Both of these problems are rampant. I've seen entire shops with
| underpaid foreign workers and mass layoffs with workers replaced
| with offshore and nearshore firms.
| duxup wrote:
| This is less on that specific topic and more general: While I
| enjoy the hacker news forums a great deal, I've no relationship
| with YC as an org. I am not sure that YC has any particular
| interest in things that might impact me as an individual
| contributor in an org as much as it impacts them.
|
| Understandably there's an everyone for themselves aspect here,
| but that makes these kinds of call to actions a bit hollow to me.
| dang wrote:
| Sure, YC is a business. But HN has so many people building
| software that there's also a community interest here--otherwise
| I wouldn't have suggested this thread.
|
| pg used to do this kind of thing on HN from time to time,
| especially on internet freedom issues, so this is a bit of
| return-to-roots for the site. SOPA is the one I remember but
| there were others.
| freedomben wrote:
| Just my two cents of course, but I think this is an excellent
| post for HN. One of the most directly relevant to people in
| this community (even those who don't seem to understand why)
| in a very long time.
| JamesBarney wrote:
| This is something that both impacts them and impacts you if
| you're a developer.
|
| This tax treatment can increase the cost of a dev by 5-15%
| which leads to less hiring and a looser job market. Which will
| impact us even if we're not looking for work because most
| companies look at market rates when deciding raises.
| duxup wrote:
| Possibly, but I think if YC companies could get away with
| just cutting everyone they would too.
|
| I don't doubt there's an impact here, but it's not because
| they have a real interest in any other topics that concern me
| and hiring, H1B and so on.
| bravesoul2 wrote:
| Devils advocate might say
|
| 1. Lots of groups want to pay less tax to suit them. Just
| because it benefits us doesn't make the lobbying logical.
|
| 2. We call ourselves builders. But you presumably can't claim
| the cost of building your house against income tax. So why is
| out building different.
|
| 3. Come on; be honest: software development was always the
| loophole. You have coders building next year's features and
| you are saying _that_ is a legitimate expense against this
| year 's profit. You couldn't have made profit this year
| without a half implemented unreleased AI sparkle?
|
| I really think the law is silly from a practical point of
| view but it's good insofar that other countries' silicon
| valleys need a chance ;)
| jgalt212 wrote:
| As a business owner, I've been adversely impacted by this. I
| still can't wrap my head around how this is legal or sustainable.
| If I buy $1MM of plant and equipment, I may not be able to
| expense it all in year 1, but I can relatively easily get a loan
| to finance the purchase of such--and manage my cashflows. The
| same is not for devs. I cannot easily get a loan for $1MM in dev
| salaries. In my own case, I don't need the loan to pay the
| salaries. I need the loan to pay the taxes for the portion of the
| salaries I cannot deduct as an expense. It's just insane.
| thaumasiotes wrote:
| Question: say you buy the equipment personally and then rent it
| to your business. What does the tax treatment look like?
| jgalt212 wrote:
| If the company is a pass through entity, I'm pretty sure this
| nets out to zero. I don't know how this nets out under a C
| corp.
| silverlight wrote:
| Happy to support this, desperately needs to be changed.
| mediaman wrote:
| 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" an "expense",
| regardless of the fact that you paid them.
|
| What you've actually done, Congress said, is bought a capital
| good, like a machine. And for calculating tax owed, you have to
| depreciate that over several years (5 in this case).
|
| Depreciating means that if you pay an engineer $200k in a year,
| in tax-world you only had $40k of real expense that year, even
| though you paid them $200k.
|
| So the effect is that it makes engineers much more expensive,
| because normally when a company hires an engineer, like they
| spend on any other expense, they can at least think "well, they
| will reduce our profit, which reduces our tax obligation," but in
| this case software engineers are _special_ and aren 't deductible
| in the same way.
|
| In the case of the $200k engineer, you deduct the first $40k in
| the first year, then you can expense another $40k from that first
| year in the second year, the third $40k in the third year, and so
| on through the fifth year. So eventually you get to expense the
| entire first year of the engineer's pay, but only after five
| years.
|
| The effect is that companies wind up using their scarce capital
| to loan the federal government money for five years, and so
| engineers become a heavy financial burden. If a company hires too
| many engineers, they will owe the federal government income tax
| _even in years in which they were unprofitable._
|
| These rules, by the way, don't apply to other personnel costs. If
| you hire an HR person or a corporate executive, you expense them
| in the year you paid them. It's a special rule for software
| engineers.
|
| It was passed by Congress during the first Trump administration
| in order to offset the costs of other corporate tax rate cuts,
| due to budgeting rules.
| logifail wrote:
| > 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 [..]
|
| I'm not sure it's helpful to simplify quite that much, doesn't
| this usually depend on whether we're talking about operating
| expenses (typically rent, utilities, salaries, supplies) or
| capital expenditures (typically buildings, land,
| intangibles...)?
| GavinMcG wrote:
| It found it helpful that it was presented that simply. The
| point isn't what _else_ is or isn't deductible, it's that
| engineering salaries went from being deductible to being
| amortized.
| logifail wrote:
| Businesses don't get to say they're claiming "$900k in
| costs" ... it depends on _what kind of costs_... EDIT: and
| in this instance, it depends on _what kind of_ software
| engineering.
| organsnyder wrote:
| But why is software engineering treated specially, here?
| Does Disney have to pay taxes on film animators the same
| way, given that they're developing a capital asset?
| PaulDavisThe1st wrote:
| Probably that is a large, rich field, and when you crunch
| the numbers, collecting corporate income taxes on 80% of
| essentially all s/w developer salaries in the first year
| after it goes into effect was a nice push to the CBO
| numbers related to Trump's 2017 tax cuts.
| NickHirras wrote:
| This is what's happened at my workplace. We account for
| time spent working on developing new products differently
| that development time maintaining legacy applications.
| Because they are reported for tax purposes differently.
| codazoda wrote:
| This gets really "gray". I work on web software and we
| tend to deploy at the end of the day. Meaning only the
| smallest programs are "new" or not yet in service.
|
| This is a mess.
| phkahler wrote:
| Seems like maintenance is better and can be deducted in
| the same year?
| PaulDavisThe1st wrote:
| > Because they are reported for tax purposes differently.
|
| For software that _used_ to be an option.
|
| Sec 174 removes the option.
| ASalazarMX wrote:
| That's nuts, since a payroll should never be considered an
| asset. That's trying to put a material value on software, and
| doing it based on the salaries of developers is as crazy as
| valuing it in lines of code.
|
| The value of software could be based on something more
| realistic, like a percentage of actual revenue, but I suppose
| tech giants would be against that.
| addaon wrote:
| > That's trying to put a material value on software, and
| doing it based on the salaries of developers is as crazy as
| valuing it in lines of code.
|
| Software clearly has material value. For software that is
| built, not bought, the company building it clearly values it
| exactly enough to pay the salaries of the software developers
| building it. What other estimate of its material value is
| better than the one that the company purchasing it is
| demonstrably willing to pay?
| yojo wrote:
| The argument I've heard is it specifically makes investing
| in speculative software (new product lines, new features,
| etc) more expensive.
|
| If you're doing new drug discovery at a bio-lab, treating
| all your failures as depreciating "assets" seems bonkers.
| The same seems true of much software development where the
| work product ends up thrown away.
| ndriscoll wrote:
| The answer to this seems obvious to me: let the company
| publish all code and documentation pertaining to failed
| experiments and release it into the public domain to be
| allowed to fully depreciate it immediately. If it is
| _actually_ worthless, they should be happy to do so.
| throwaway7783 wrote:
| As long as the same is held true about car designs that
| never went to production, drug design that were not
| deemed profitable etc. Why pick on just software?
| ndriscoll wrote:
| Yes, clearly the same reasoning applies to any copyright,
| patent, or trade secret (and we should stretch out the
| depreciation schedule to match the durations of those
| things. It follows that development of trade secrets
| would not be deductible. Perhaps a new category of
| escrowed expiring trade secrets could be created to make
| it deductible). We could all benefit from companies
| publishing research that didn't pan out, and it should
| come at little to no cost to them!
| throwaway7783 wrote:
| As much as I like this Utopia, this will unfortunately
| never happen in a capitalistic country.
| jandrewrogers wrote:
| That doesn't follow. Code can contain extremely sensitive
| and/or valuable IP independent of the value of the code
| as an asset. Reduction to practice frequently fails to
| produce usable software.
| ndriscoll wrote:
| That's why I didn't just include code; if you produced
| valuable design docs as part of your work, that was part
| of your research too. I'm generally skeptical of the
| societal utility to offering any protections or special
| treatment for trade secrets though (the entire point of
| patents/copyright is to incentivize people to share these
| things; it's insane to also protect their secrecy), so
| that no doubt affects my thinking. If you want the
| deduction for having spent money on R&D that you didn't
| think was valuable, prove it by giving it up. If it's
| entangled in other secrets you don't want to share, you
| get no deduction. Seems fair to me.
| jandrewrogers wrote:
| That is making assumptions that aren't based in reality.
| Serious software R&D stopped relying on patents and
| copyrights years ago because they are effectively non-
| enforceable in many cases.
|
| A significant percentage of algorithm and foundational
| computer science R&D in software is now protected
| exclusively via trade secrets. There are no other
| practical options. This wasn't always the case but all
| other forms of protection have steadily eroded over the
| last couple decades.
|
| Weaponizing the tax code because you have an ideological
| aversion to trade secrets doesn't seem fair to me.
| grogers wrote:
| How does this compare to a machine that breaks and is
| thrown away before its amortization is complete? For the
| machine can you immediately deduct the remaining amount
| or is it required to continue to spread the value over
| the original time period?
|
| I would imagine software that is thrown away should be
| similar?
| ensignavenger wrote:
| Generally speaking, yes, you can immediately deduct the
| non depreciated value. Most machines will be scraped,
| giving them a "scrape value". You would immediately
| deduct the difference.
|
| In fact, sometimes when you dispose of an asset, you get
| more for the scrape than you have left in depreciation-
| and you have to take that difference as a profit.
| throwaway7783 wrote:
| The price at which it sells the said software? Aka profits
| after expenses?
| addaon wrote:
| > The price at which it sells the said software? Aka
| profits after expenses?
|
| A vanishingly small percentage of software is sold.
| throwaway7783 wrote:
| If we are being pedantic, sold or rented. I think the
| issue is on how the concept asset depreciation is applied
| blindly, as if dev salaries every year is the asset value
| every year. Unlike other asset classes, there is no easy
| to way value software beforehand, because you are not
| buying it from some market.
| nolok wrote:
| By that logic so does an accounting book by an accountant,
| so does an inventory log by a factory hand, ...
| epistasis wrote:
| > software that is built, not bought, the company building
| it clearly values it exactly enough to pay the salaries of
| the software developers building it
|
| Even in the absence of the Trump tax rule, a software
| company values the software they are building a _lot_ more
| in financial terms than the cost of building it. Any
| project where value=cost should be cut, when the value is
| taking into account the value it brings to the rest of the
| company.
|
| This is the entire point of the business, after all: take
| labor, land, and capital and make something that's worth a
| lot more to the world than the sum of the components.
| PaulDavisThe1st wrote:
| It's not a question of what its material value is.
|
| It's a question of whether it is a capital expense that is
| required to be amortized over 5 or 15 years, or a regular
| expense that can be deducted in the year in which it is
| incurred.
| narag wrote:
| _That 's trying to put a material value on software, and
| doing it based on the salaries of developers is as crazy as
| valuing it in lines of code._
|
| I'm not sure if depreciation is the same concept as we call
| _amortizacion_ in my country: capital that counts as
| investment instead of expenses because you 're expected to
| keep extracting value from it over the years, so you can't
| get a deduction for the whole expense when you first pay for
| it.
|
| If that's what this is about, it's absurd not for the reason
| you say (salaries are not a bad proxy for value, since you
| expect the profit will be greater) but because you'll
| probably keep paying for maintenance and evolving the
| software.
| jameshart wrote:
| Exactly. We would _love_ software development to be as
| simple as: you pay $1m to engineers to develop a software
| machine; you now have a $1m software machine that you can
| pay nonengineers to operate and crank out revenue.
|
| In practice software machines need constant tending and
| operation by engineers in order to keep them pumping out
| money.
|
| In the context of live software systems, a lot of software
| engineering - even engineering that involves innovation and
| creative research and problem solving - is done in service
| of making the machine continue to operate; it is
| _operational expense_.
|
| It's like: Buying some filing cabinets is clearly a capital
| expenditure. But paying an office administrator to come up
| with and keep modifying the filing system you use in those
| filing cabinets to make sure it continues to serve your
| business is not capital investment, it's business
| operational costs.
| amanaplanacanal wrote:
| If you buy a building, it is a capital expense that
| depreciates over years, even though you absolutely have to
| keep paying for maintenance. Why should software be
| different?
| convolvatron wrote:
| if I pay a bunch of employees to take the cloth I buy and
| cut and sew into shirts, that's an expense some directly
| out of my revenue and isn't taxed as profit or forced to
| be amortized. Why should software be different?
| amanaplanacanal wrote:
| I suppose it depends. Are you making shirts to sell, or
| to use in your business? One is inventory, one is a
| capital expense.
| jetsnoc wrote:
| Unlike a building--where you might find one for sale and
| simply buy it--most companies don't "buy one software"
| from a vendor and amortize it like a purchased asset.
| Instead, they hire full-time teams to build, maintain,
| and evolve software as a core, continuous function of the
| business. And most companies don't "sell one software"
| either--they lease it to others, as software-as-a-
| service.
|
| In your analogy, when a company constructs and sells a
| building, labor costs are deductible as part of the cost
| of goods sold. Only the profit--when the finished product
| is sold--is taxable. But under the new Section 174 rules,
| software R&D labor is treated like the purchase of a
| capital asset, even though the company is leasing a
| service, not selling a final, tangible product.
|
| The flaw? Software isn't a static, finished asset you
| walk away from. It's a living system. One update might
| fix a bug, introduce a feature, and improve long-term
| architecture all at once. Is it maintenance? Innovation?
| Infrastructure? The answer is usually "all of the above."
| So how does anyone report that cleanly on a tax form?
| What's the IRS's standard test for sorting that out?
|
| Before TCJA, some companies may have stretched R&D
| definitions to claim Section 41 credits. But after the
| TCJA change, the incentive flipped. Now, companies are
| penalized for doing real R&D--the very thing we should be
| encouraging. Startups are now paying painfully high tax
| bills simply for building something they cannot lease out
| en masse yet.
|
| We should want to incentivize invention, not suppress it.
| We need more startups, not fewer. Software--especially
| with generative AI--is one of the few options for us left
| that can create new markets, expand GDP, and drive
| compounding national growth. The upside is limitless.
| This is hammering our economy and it's strangling
| startups at the exact moment we need them most.
|
| Congress, do the right thing; restore the rules we had
| pre-TCJA.
|
| Timeline:
|
| - 1981: Section 41 introduced -- provides tax credits for
| qualified R&D activities.
|
| - Pre-2018: Under Section 174, R&D expenses (including
| software) were fully deductible; Section 41 credits could
| be claimed.
|
| - 2017 (Dec): TCJA passed by the 115th Congress and
| signed by President Trump; Section 174 expenses to be
| amortized over 5 years starting in 2022.
|
| - 2022: Amortization rule takes effect. Companies must
| now capitalize and amortize R&D expenses.
|
| - 2025: Section 174 amortization remains in effect;
| Section 41 credits still exist but now come with a steep
| tradeoff.
| jldugger wrote:
| > That's trying to put a material value on software, and
| doing it based on the salaries of developers is as crazy as
| valuing it in lines of code.
|
| We all do this at the conclusion of every successful job
| interview. And performance review. And budget review. IMO
| it's a reasonable floor on the value engineers produce: if
| you produced an asset worth less than your salary you should
| be concerned for your career.
| pc86 wrote:
| On what time scale? In a year, sure. But there are
| certainly days (weeks?) where the actual value produced by
| any one engineer is zero, or negative.
|
| This whole discussion is sort of orthogonal to the real
| point, though. The state (or the IRS, or Congress, or
| whatever) has decided that for some reason, if Jim gets
| paid $100k his boss can deduct $100k in expenses, but if
| Jane gets paid $100k her boss can only deduct $20k, because
| she's typing different things into a different box the
| computer.
|
| This is a categorically stupid thing to assert. It's a
| stupid thing to say and it's a stupid thing to believe.
| Payroll is an immediate cost, paying for the development of
| software is not remotely the same thing as purchasing a
| capital asset, and this is exactly what we get when we keep
| electing nonagenarian plutocrats to office year after year,
| decade after decade, who think the internet is a series of
| tubes.
| mbesto wrote:
| > That's nuts, since a payroll should never be considered an
| asset.
|
| That's because it's not "a payroll". When a payrolled
| resource builds a combustion engine that powers the office
| where the rest of the payrolled resources work every day and
| that engine lasts 15 years, then its a very clearly a capital
| expense and an asset.
| OneDeuxTriSeiGo wrote:
| So it applies to software engineers but under what definition
| of software engineer?
|
| This [1] is the only definition the code actually give.
|
| > (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.
|
| 1. https://www.law.cornell.edu/uscode/text/26/174
|
| -----
|
| Is a test or QA engineer considered a software engineer?
|
| Is an FPGA or ASIC engineer still considered a software
| engineer if they are writing in HDLs?
|
| Is a systems engineer, electrical engineer, or mechanical
| engineer considered a software engineer because they use
| MATLAB, etc and use programming to do their design work?
|
| Is a sysadmin, DB admin, or other IT staff considered a
| software engineer because they write software as part of their
| job?
|
| What about a quantitative analyst, data scientist, accountant,
| actuary, or any of the other maths and analysis adjacent job
| roles that regularly use some level of programming to do their
| job (and therefore write software)?
|
| What about HR, etc who use excel documents? Excel is
| fundamentally just a graphical array programming language (and
| the design of spreadsheet tools is heavily inspired directly
| from APL). Is anyone who uses excel or builds/maintains
| spreadsheets considered a software engineer?
|
| Like software engineering is such a broad field and programming
| bleeds into every part of modern business at this point.
| teeray wrote:
| > under what definition of software engineer?
|
| Probably a broad enough definition to net the US Government
| the greatest tax revenue possible for the effort to enact
| this.
| abeppu wrote:
| IDK if that's right. Oddly, the current administration has
| gutted the IRS and seems pretty ambivalent about collecting
| taxes that _are_ on the books. I wonder if there will be an
| inconsistent definition of who is a software engineer,
| based on how friendly the company is with the
| administration, whether the company still has someone with
| a DEI title, etc.
| teeray wrote:
| > the current administration... seems pretty ambivalent
| about collecting taxes that are on the books. I wonder if
| there will be an inconsistent definition of who is a
| software engineer, based on how friendly the company is
| with the administration, whether the company still has
| someone with a DEI title
|
| So basically the same situation that we have with
| bullshit speed limits everywhere.
| ethbr1 wrote:
| If we had specifically defunded highway patrol that was
| net-revenue-positive, yes.
|
| Republican defunding of the IRS is literally insane:
| reform by cutting enforcement.
|
| - It rewards people who cheat on their taxes.
|
| - It costs the government more money that it saves,
| because IRS investment is net revenue positive.
|
| But then, the modern Republican party seems more
| concerned with being the party of 'law(s I agree with)
| and order (for people who aren't me).'
| jandrewrogers wrote:
| People greatly overestimate the amount of material
| cheating that happens, especially among large companies
| and the wealthy. I used to work for a Federal audit
| organization and almost all of the recoveries had a root
| cause in sloppy compliance and record-keeping practices
| rather than intentional malfeasance. It is broadly
| recognized as optimal that the recovered money should be
| several-fold the direct costs spent to recover it because
| this activity incurs a lot of non-obvious indirect costs.
| It is a variation on the principle that the optimum
| amount of fraud is non-zero.
|
| Most of the blatant tax fraud is much lower down the
| economic ladder because below a certain threshold
| recovery doesn't justify the cost and people know this.
| The amount you can get away with is far below the
| threshold where it would be worth the risk for wealthy
| parties. The best ROI for auditors in many of these cases
| is to make regular object lessons at random to discourage
| it rather than systematically prosecute it.
|
| AFAIK, the increased spending at the IRS did not lead to
| concomitant offsetting recoveries. This is a predictable
| outcome, the amount of enforcement activity has been
| pretty finely tuned for decades to optimize ROI. Most of
| the recoveries come from changing focuses on compliance
| to areas that haven't seen much enforcement activity in
| many years. Fighting entropy basically.
|
| If you assume that most large recoveries are from
| sloppiness rather than systematic tax fraud, it changes
| what is going to be an effective strategy.
| guntars wrote:
| I'd think it's normal and expected that the "mistakes"
| made will err on the side of benefiting the taxpayer,
| i.e., reducing their tax bill.
| madars wrote:
| This comment (currently downvoted to hard-to-read grey-
| on-grey) is an excellent example why you should always
| enable "showdead" in your profile, use user CSS to make
| downvoted comments readable again (e.g.,
| https://news.ycombinator.com/item?id=41514726), and
| browse https://news.ycombinator.com/active instead of the
| homepage once in a while.
| LamaOfRuin wrote:
| >AFAIK, the increased spending at the IRS did not lead to
| concomitant offsetting recoveries. This is a predictable
| outcome, the amount of enforcement activity has been
| pretty finely tuned for decades to optimize ROI. Most of
| the recoveries come from changing focuses on compliance
| to areas that haven't seen much enforcement activity in
| many years. Fighting entropy basically.
|
| AFAIK, all the data shows exactly the opposite.
|
| https://news.harvard.edu/gazette/story/2023/07/turns-out-
| irs...
|
| https://www.irs.gov/pub/irs-pdf/p5901.pdf
|
| (There are many more studies from various outside
| organizations, as well as other non-partisan government
| bodies outside the IRS concluding similarly)
| AnthonyMouse wrote:
| 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 likely to be cheating. The more
| people you want to audit, the lower the collections rate
| gets.
|
| But if you're averaging in the recovery rate from the
| people who are so obviously cheating, you can get quite
| far down the road past a marginal benefit before the
| _average_ becomes a negative number.
|
| Meanwhile, even that isn't considering the indirect
| costs. The IRS spends $1 and recovers $2, but audits are
| much cheaper than the IRS than they are for taxpayers. So
| the IRS spends $1 and the taxpayers (many of whom did
| nothing wrong, because we're talking about averages here)
| have to pay $5, in order for the IRS to recover $2.
| That's quite bad -- $6 is being spent in order to recover
| $2, but it's being reported as a $1 net gain.
|
| And it's worse than that, because those $6 aren't just
| money, it's actual spending -- human labor hours that
| couldn't be allocated to something else -- so what you're
| losing isn't the _cost_ of that labor, it 's the _value_
| of that labor. Someone was being paid $1 to create $2 in
| value but now instead of doing that they have to spend
| that time on an audit, so the $6 in cost is actually $12
| in lost value.
|
| Not accounting for things like this makes it seem like we
| should be spending a lot more resources on something with
| diminishing returns and large hidden costs.
| ethbr1 wrote:
| 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.
| ethbr1 wrote:
| > _the amount of enforcement activity has been pretty
| finely tuned for decades to optimize ROI_
|
| And then cut by 20% by the current adminstration [0].
|
| I'd phrase the question of auditing lower income filers
| vs higher income filers differently -- do you think
| people with higher incomes should feel safer about
| cheating on their taxes?
|
| Because average recoveries do scale with income [1];
| unsurprisingly, it seems wealthy people commit tax fraud
| too [2].
|
| While catching the low-hanging fruit (and therefore
| better ROI) is one goal, it needs to be balanced with
| ensuring there are similar levels of compliance (or
| penalties where it's lacking) in higher income payers.
|
| [0] https://taxpolicycenter.org/taxvox/cuts-spending-and-
| staff-d...
|
| [1] https://www.nytimes.com/2025/06/05/upshot/tax-audits-
| wealthy...
|
| [2] https://www.irs.gov/newsroom/irs-launches-new-effort-
| aimed-a... https://www.irs.gov/newsroom/irs-
| tops-1-billion-in-past-due-...
| https://www.foxbusiness.com/politics/yellen-touts-irs-
| enforc...
| kla-s wrote:
| Whats your view on Cum-Ex?
|
| And maybe as a Bonus what do you make of the smaller
| (relative) taxrate the bigger fish (companies/wealthier
| individuals) pay?
| drdec wrote:
| What's really going on here is that this provision was
| part of the tax acts from the first Trump administration.
| Due to procedural rules in Congress, they had to make
| those cuts appear revenue neutral over a 10 year time
| period. This tax increase is part of that. Very likely
| nobody involved really had a reason or cared that SEs get
| categorized this way, it just let them pass the changes
| they really wanted at the time.
| sh34r wrote:
| Judging by the Big Law shakedown, enforcement will be
| based on how much of your corporate cash is held in
| Taco's shitcoin.
| sailfast wrote:
| They want the change to _seem_ like it will bring in
| revenue so the CBO number adding to the deficit is lower.
|
| The folks advocating for this could care less about the
| deficit, but they need to act like they care.
| sh34r wrote:
| A sufficiently idiotic tax scheme such as Section 174 can
| destroy far more income tax revenue than it collects, by
| destroying jobs and small businesses, and knocking high
| earners down a tax bracket or three. Section 174 isn't
| doing much to tax FANG companies. Apple has all their
| profits in their Double Irish Dutch Sandwich racket. Amazon
| cooks the books to appear unprofitable on paper, in a
| manner that would make Hollywood accountants blush.
|
| This really only hurts the competition, who is completely
| unprofitable in every sense of the word. And all for what?
| Left-shifting the collection of a 21% income tax by a
| couple years? I think many of us would've done terrible
| things in 2021 to only have an effective tax rate of 21%.
| The government mugged Peter the payroll tax man to pay Paul
| the corpo tax man, but they disemboweled Peter in the
| process, and most of the money had to be disposed of as a
| biohazard.
|
| I don't believe Section 174 was an honest attempt to manage
| the deficit. I think Zuck, the PayPal Mafia, and the blood-
| boy cabal bribed some Congresscritters to kill off what
| remained of their competition.
| robocat wrote:
| > I think Zuck, the PayPal Mafia, and the blood-boy cabal
| bribed some Congresscritters to kill off what remained of
| their competition.
|
| What's with the craze for finding conspirational
| incentives?
|
| There's a repeatable pattern where commenters hallucinate
| an unreasonable incentive for everything.
|
| Motivations are difficult to discern (see courtrooms),
| and it is a modern vice to try and analyse incentives,
| but too often the cause-and-effect imaginations are not
| even reasonable guesses, but are just pure fiction.
|
| My best guess (based off word choices made) is that we
| all love to create new stories/narratives, that fit into
| our personal tribal stories.
| sh34r wrote:
| My best guess is that legalizing corruption has made
| everyone a bit more deranged. Some more than others.
|
| I don't think it's such a huge leap that a policy with
| such unanimous opposition was put in place by the select
| few special interests who benefit from it. It helps (or
| doesn't help?) when they all got together for that photo
| op at the inauguration.
| pigeonhole123 wrote:
| Believing in corruption doesn't have to be in the same
| league as believing the moon landings were faked. I don't
| particularly think this tax thing is something other than
| short-sightedness, but there is a tendency among some to
| dismiss even blatant cases of corruption.
|
| Believing in fake moon landings requires believing in a
| level of competence I don't think exists in large
| organizations, but the same applies to believing there is
| no corruption or backroom deals, which are exposed all
| the time and seemingly rarely punished.
| normie3000 wrote:
| > Is an FPGA or ASIC engineer still considered a software
| engineer if they are writing in HDLs?
|
| Of course not. The Glorious Leader is rescuing the american
| hardware sector.
| EnderWT wrote:
| The IRS released guidance back in 2023:
| https://www.irs.gov/pub/irs-drop/n-23-63.pdf
|
| It starts on page 23.
|
| Plenty of analysis online by tax firms but I'll quote from
| this one: https://insightplus.bakermckenzie.com/bm/attachment
| _dw.actio...
|
| > Generally, activities treated as software development for
| section 174 purposes include, but are not limited to, the
| following.
|
| * planning the development of the computer software
|
| * designing the computer software
|
| * building a model of the computer software
|
| * writing source code and converting it to machine-readable
| code
|
| * testing the computer software (up to the point that a
| taxpayer places the computer software into service or
| determines that the computer software is ready for sale or
| licensing to others)
|
| * producing product master(s), if the taxpayer develops the
| computer software for sale or licensing to others.
|
| > Activities that are not treated as software development
| vis-a-vis software developed by a taxpayer for use in its
| trade or business are as follows:
|
| * training employees and other stakeholders that will use the
| computer software
|
| * maintenance activities after the taxpayer places the
| computer software into service
|
| * data conversion activities, except for activities to
| develop computer software that facilitate access to existing
| data or data conversion
|
| * installing the computer software and other activities
| relating to placing the computer software into service
| OneDeuxTriSeiGo wrote:
| > * data conversion activities, except for activities to
| develop computer software that facilitate access to
| existing data or data conversion
|
| ex: linking excel spreadsheets or setting up excel to
| ingest data from a sharepoint or network drive would still
| fall under the definiton of software developer
|
| > * maintenance activities after the taxpayer places the
| computer software into service
|
| So a sysadmin or a DB admin writing scripts or a DB admin
| writing queries and adding new reports would be considered
| software development
|
| It just seems way too easy for arbitrary employees to get
| pulled in under this definition because it just
| fundamentally misunderstands how widespread programming is.
| raverbashing wrote:
| You missed the paragraph saying that maintenance
| activities are _not_ considered development activities
| OneDeuxTriSeiGo wrote:
| But that's the rub right? What is the definition of
| maintenance activities? And for what software? If you are
| writing a new script to automate something or updating an
| existing script, is that not software development?
|
| If that's considered maintenance activities then would
| maintaining a software codebase not be considered
| maintenance activities then?
| dgfitz wrote:
| In my simple mind, if software has been "released" it is
| no longer R&D, and "bug fixes" (which should include
| continuous improvements such as your example) are not
| research.
|
| I may be way, way wrong though.
| jandrese wrote:
| That seems too exploitable to pass muster in the court.
| If you release Beta 0.0.1 of your software after 2 months
| of development then spend the next 5 years getting it up
| to version 1.0 that's clearly a development effort not a
| maintenance effort.
| tomrod wrote:
| Is it?
| shakna wrote:
| > such as marketing and promotional activities,
| maintenance activities that do not give rise to upgrades
| and enhancements, distribution activities
|
| If it leads to a new release, then its software dev.
| Meaning anything more than a minor patch is going to
| count.
| hansvm wrote:
| That's the reason we have courts, to cut through those
| gray areas.
| jamessinghal wrote:
| The IRS Guidance says this in 5.05(2), which is most
| relevant to software startups: (2)
| Computer software developed for sale or licensing to
| others. In the case of computer software that is
| developed for sale or licensing to others (or upgrades
| and enhancements to such software), activities that occur
| after such software (or upgrades and enhancements
| to such software) is ready for sale or licensing to
| others, such as marketing and promotional activities,
| maintenance activities that do not give rise to
| upgrades and enhancements, distribution activities (for
| example, making the software available via remote
| access), and customer support activities.
|
| So they are maintenance as long as they "do not give rise
| to upgrades and enhancements", which would be the
| responsibility of the taxpayer to track. I'm sure there
| is more nuance to it in practice.
| JumpCrisscross wrote:
| Has the IRS actually dinged anyone for fucking with how
| they categorise software expenses?
| axus wrote:
| What a wonderful sales pitch for a timesheet software
| feature. Track non-software-related work for expensing in
| the current tax year.
| koolba wrote:
| Any decent sized company already does this. You'll see a
| field on things like Jira tickets for whether something
| is maintenance or capital improvement. And presumably
| that information can be used to infer the percentage of a
| given workers time that can be attributed to deductible
| vs depreciable expenses.
| elliotec wrote:
| Exactly. Everywhere I've worked, this was a quick and
| non-intensive collaboration between engineering
| management and like one finance person. It's baked into a
| ton of tools already (like you mentioned, Jira) so the
| percentages are usually just there and eng leaders review
| it with FP&A twice a year.
| hn_throwaway_99 wrote:
| > maintenance activities after the taxpayer places the
| computer software into service
|
| This is the part that I think makes this whole jig of
| treating software development like a purely capitalizable
| expense so nuts.
|
| I previously worked at a public company that _wanted_
| software developers to treat as much work as possible as
| CapEx - it makes you look more profitable than you actually
| are, which is bad for taxes but good for your stock price.
| Developers hated it. The problem with it is that with
| modern web based software, CI /CD, A/B testing, etc. that
| the line between "new software" (i.e. CapEx) and "maint"
| (i.e. OpEx) is so blurred as to be pointless. E.g. many
| times I'd be fixing a bug (technically OpEx) but that would
| often lead to some new features ideas, or ways to structure
| the software to make it easier to add new features
| (technically CapEx). Software is fundamentally different
| from capital expenditures in other areas, and assuming a 5
| year straightline depreciation schedule for software is
| laughably absurd.
|
| What other sort of capital expenditure has you do releases
| every day, or requires 24/7 monitoring? I would argue that
| the business of software has changed so drastically over
| the past 20 or so years that it makes much more sense just
| to categorize it as OpEx by default (for both tax and GAAP
| purposes), and only have it be capitalized as CapEx for
| _very_ small and specific reasons.
| hshdhdhj4444 wrote:
| The entire thing is nuts.
|
| And no one thinks it was sensible.
|
| The only reason it exists is for political games by Trump
| 1.
|
| Now imagine all the nonsense that's gonna go into the
| much bigger Trump 2 tax cut bill.
| michaelt wrote:
| _> What other sort of capital expenditure has you do
| releases every day, or requires 24 /7 monitoring?_
|
| Quite a lot of them actually. If I spend $$$$ setting up
| a car factory with a big production line, I'm going to
| have people monitoring it 24/7. If I build an airport,
| I'm going to have air traffic controllers working 24/7.
| And so on.
|
| Of course, the air traffic controllers didn't build the
| runway, and the construction crew don't direct air
| traffic, so the whole situation is much less ambiguous.
| gboss wrote:
| What we do is enforce that everyone keeps one ticket in
| JIRA as in progress and use a timekeeping add on. The
| tickets role up to epics and initiatives. I review each
| top level initiative and epic with finance and they deem
| it capitalizable or not. Then we add a haircut. It's
| really not that much work. We have an hour meeting
| monthly to work it out but I make sure to exclude my
| mainline engineers. They don't need that
| anigbrowl wrote:
| The answer to all these questions is yes, i don't see the
| point in trying to obfuscate this with artificial complexity.
|
| _What about HR, etc who use excel documents?_
|
| IF they are using it rather than developing it, no. If they
| put in 5 hours a week writing code, yes for those 5 hours.
| This isn't hard.
| jandrese wrote:
| So now every engineer has to record how many hours each day
| were spent doing "software development" vs. "software
| maintenance"/"overhead"/"etc..."?
| joquarky wrote:
| In my experience, at least contractors at a major ISP
| have to.
| Dig1t wrote:
| How is an HR person writing a script to do their HR work
| better considered an R&D expense?
| ManBeardPc wrote:
| > 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.
|
| For me that sounds like everyone and everything in a company
| that develops software of any kind, including low-/no-code
| stuff, accounting, HR, travel costs, massages. Like who is
| not "in connection with the development of any software" in a
| company that develops software? Without further definitions
| this is even worse then just software engineering costs.
| paulddraper wrote:
| There is a substantially more definition, but the tl;dr is
| this an R&D expense, or COGS expense?
|
| R&D is amortized, COGS is not.
| jajko wrote:
| Why not claim them as: admins, devops, analysts, testers,
| technicians, managers? Probably few more. Its really about
| precisely software _development_ roles? Don 't we anyway do
| some of that other stuff regardless?
|
| But if you are correct that is supremely dumb, especially in
| place like US.
| OneDeuxTriSeiGo wrote:
| https://www.law.cornell.edu/uscode/text/26/174
|
| > (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.
|
| Strictly speaking every single one of those jobs falls under
| that role. If you "develop" any software, which arguably
| includes even making or maintaining excel spreadsheets (as
| excel is a graphical array lang inspired by APL), then you
| seem to fall under this umbrella.
| logifail wrote:
| > Strictly speaking every single one of those jobs falls
| under that role
|
| Q: Isn't this about whether you're doing "R&D" or not?
| jandrewrogers wrote:
| No, it classifies all software development as R&D _by
| definition_.
| logifail wrote:
| > it classifies all software development as R&D by
| definition
|
| We may need to argue about the word "development", but in
| any case, do you have a reference for that?
|
| https://www.thomsonreuters.com/en-us/posts/tax-and-
| accountin...
|
| "In the United States, to help spawn innovation as part
| of the Economic Recovery and Tax Act of 1981, the
| Research & Experimentation Tax Credit was introduced.
| Although it was initially supposed to last three years as
| a specific incentive to encourage companies to invest in
| R&D, Congress recognized its value in helping businesses
| create more products and services.
|
| However, it was quickly realized that this tax code made
| calculations for R&D complicated, especially for small
| businesses, which led the government to create other
| iterations of tax codes in order to help clarify the
| situation. However, not until 2017 and the enactment of
| Section 174 of the TCJA has there been such a
| comprehensive change to R&D accounting.
|
| Indeed, before the TCJA's enactment, businesses deducted
| the total amount of R&D expenditures as an expense in the
| taxable year. Beginning in 2022, all costs related to R&D
| must now be amortized over five years for US-based
| companies or 15 years for non-US companies."
|
| I'm struggling to understand why we think R&D expenditure
| - including software development - should _not_ be
| amortised?
| odo1242 wrote:
| People think R&D expenditure shouldn't be amoritized
| because it hurts startups.
|
| For example, if you're a first-year startup and you make
| a software product with $1 million in revenue but pay
| $900,000 in software dev salaries, and the tax rate is
| 25%, without amoritization you pay
| (1,000,000-900,000)*0.25 = $25,000 in tax and make a
| profit, but with 5-year amoritization you pay
| (1,000,000-900,000/5)*0.25 = $205,000 in tax and take a
| loss.
|
| But since established companies aren't affected as much,
| they are advantaged by the amoritization rule.
| buzer wrote:
| Wouldn't "in connection" make this actually extremely
| broad? For example I doubt C-level executives have 0
| connection to software development during the year. They
| likely make official or unofficial feature requests or give
| feedback. And if we really push that definition, if the
| software collected telemetry automatically from the user
| interactions and this data was then used to improve the
| software, wouldn't just using the software be connected
| with the development of the said software?
| spullara wrote:
| They are just product managers and the development is being
| done by AI agents.
| teeray wrote:
| You jest, but you've also touched upon something interesting.
| Is this exactly what companies are trying to do? To the IRS:
| "We employ zero software engineers--only AI ranch hands to
| wrangle the AI in the right direction."
| zacharycohn wrote:
| Just to drive the point home very explicitly:
|
| That means, in the given example above, you are able to deduct
| $180k that first year instead of $900k.
|
| That gives you a profit, from a tax perspective, of $820k.
|
| But you only have $100k of actual dollars.
|
| Good luck paying your taxes!
| actinium226 wrote:
| Only if you assume that the 900k in costs is exclusively the
| salary of 5 engineers. Realistically you will employ other
| people and have overhead costs like rent, etc., and I assume
| that other non-salary costs (health insurance, etc.) aren't
| included (b/c I assume health insurance, like rent, is a
| company-wide overhead cost and that companies aren't expected
| to carve out what portion of that is going to the software
| folks but what do I know?).
|
| But if we more realistically assume it's 3 software folks at
| 200k, then the taxable profit is 580k (100 profit + 3*(200k
| salary - 40k ammortized))
| throwaway7783 wrote:
| 1M eng salaries, 5m revenue, 4M other costs.
|
| Today I am cash flow neutral at 5m revenue, but with this
| I'm paying taxes on 800k "profits", which don't exist
| anywhere but on paper. But I have to pay the taxes in real
| dollars.
| PaulDavisThe1st wrote:
| The point is that if your revenue covers their
| salaries/contract costs, you will owe tax on 80% of their
| salary in the first year.
| echelon wrote:
| This seems like the biggest reason behind the mass layoffs,
| not the end of ZIRP.
| cjbgkagh wrote:
| With ZIRP it would be relatively easy to borrow the float
| required to make up for the amortization timeline.
| naikrovek wrote:
| > That gives you a profit, from a tax perspective, of $820k.
|
| > But you only have $100k of actual dollars.
|
| > Good luck paying your taxes!
|
| a lot of people here are conflating "taxable income" and "the
| amount owed in taxes" for some reason.
|
| if I earn $100/year, and I can deduct $50 of that, my tax
| bill is not $50. It is some percentage of $50, usually a low
| number for businesses. (Amazon regularly pays $0/year in
| taxes.)
|
| depending on the tax rates and the locality of that business,
| the amount owed on tax is going to be anywhere from $0 to
| $50, and it is going to heavily favor the low end of that
| spectrum. I don't think any business pays 100% of its taxable
| income in taxes unless they have been heavily fined.
|
| $100k is likely far more than enough to pay the tax on $820k
| of taxable income for a business. It could be enough to pay
| that tax bill 10 times over, it's hard to say.
|
| my point is that taxable income != tax owed.
| aqme28 wrote:
| (Not a tax professional) The federal corporate tax rate is
| 21% and for states it ranges from 0 to about 9%.
|
| So generally you're going to pay at least 21% or $170k for
| those "profits."
| koolba wrote:
| > if I earn $100/year, and I can deduct $50 of that, my tax
| bill is not $50. It is some percentage of $50, usually a
| low number for businesses. (Amazon regularly pays $0/year
| in taxes.)
|
| It's not that low. Federal corporate tax rate is 21%. So
| you would be on the hook for $10 in taxes.
| shaftway wrote:
| > Amazon regularly pays $0/year in taxes.
|
| They * _were*_ able to, because they * _were*_ able to
| offset the cost of developers instead of having to amortize
| it out over 5 years.
| doxeddaily wrote:
| My taxes (flow through LLC) are significantly higher than my
| income for 2024 (like hundreds of k).
| candiddevmike wrote:
| How do we restore only the tax deduction and not pass the rest
| of the BBB?
| nick238 wrote:
| You don't. That's how bills are passed: everyone adds a
| little of what they want. To the extreme, it's called "pork
| barrel politics", but there's a whole continuum between that
| and a basic compromise.
| bigstrat2003 wrote:
| You contact your representatives in Congress (mail, phone, in
| person at town halls and such) and say "hey, stop passing
| giant omnibus bills". You encourage others to do the same.
| That's all you can do, as a citizen.
|
| Unfortunately it won't make a difference because the vast
| majority of Americans simply _do not care_. So very few
| people will be putting pressure on their representatives, and
| nothing will change.
| gnopgnip wrote:
| Normally when a business spends money producing a valuable
| asset, it is required to depreciate the cost to acquire the
| asset over the useful life. If a business pays people to create
| a new building, that is depreciated over 20 years. Even if it
| was paid for as salaries of employees, it isn't a special
| situation unique to software engineering.
| TulliusCicero wrote:
| I don't think that's quite right? The value of the asset
| itself is depreciated over years, sure, but the payroll
| itself for the employees is just an immediate expense.
| phkahler wrote:
| How can you compare a purchased asset to one you pay people
| to build?
| commandlinefan wrote:
| But isn't the reasoning there that you could turn around and
| sell that building right away?
| Ajedi32 wrote:
| I agree this sounds like bad policy, but what's the logic for
| doing this with actual capital goods then? Doesn't that have
| exactly the same problem of limiting corporate investment?
| shoxidizer wrote:
| The reasoning is that the deductions for expenses should be
| applied for the same year as the income they bring in. For
| expenses that will cover multiple years, they are spread out
| over those years.
| SoftTalker wrote:
| Accounting likes to recognize expenses with revenues. If an
| asset will be producing revenue for five years, its cost is
| recognized over that same time span.
| aaronax wrote:
| So...don't you get value from the newly created software
| for ~5 years?
| Nevermark wrote:
| The answer to that question can only be reliably answered
| in 5 years.
|
| Actual honest valuation of software is something that
| requires actual evidence.
|
| Software returns have extremely high variance. From a
| lot, to none, to high negative (For projects that don't
| complete, or worse, deploy to negative effect.)
| jameshart wrote:
| Yep, some software systems become money pits. You end up
| having to pay more people to keep them running.
|
| Only now if those people you have to pay to keep them
| running are software developers, you have to act like the
| money you're spending on them is helping make new value,
| not merely paying interest on technical debt. Fun!
| atmavatar wrote:
| That's going to heavily depend on the type of software
| and whether it's sold as a shrinkwrap product or a
| subscription.
|
| For example: your average AAA game will likely produce
| the vast majority of its value inside the first year upon
| its release.
|
| At the extreme opposite end you have things like
| enterprise software using subscriptions, whereby the
| software continues to produce value year over year, but
| you're generally _also_ paying developers ' salaries to
| maintain and enhance the softare year over year. That,
| too, makes little sense in spreading out salaries as a
| cost over 5 years.
|
| I can't really think of any cases where a piece of
| software is sold as shrinkwrap software, requires no
| ongoing maintenance/updates, and is expected to continue
| earning revenue for many years afterward. That just isn't
| the industry we live in.
| PaulDavisThe1st wrote:
| > At the extreme opposite end you have things like
| enterprise software using subscriptions, whereby the
| software continues to produce value year over year, but
| you're generally also paying developers' salaries to
| maintain and enhance the softare year over year. That,
| too, makes little sense in spreading out salaries as a
| cost over 5 years.
|
| There's also a ship-of-theseus problem here. How much
| change has to happen to a codebase before it's not the
| same software anymore?
| rawgabbit wrote:
| The only logic was to make the Trump 2017 tax cuts look
| "revenue neutral". They were cooking the books so the CBO
| would give the tax cuts a passing grade.
|
| https://americansfortaxfairness.org/ways-means-trump-tax-
| law... Quote: _Corporations have traditionally been allowed
| to deduct all of their research expenses in the year
| incurred, even though a lot of research pays off slowly so
| its costs should similarly be written off over time. Adopting
| this position, and as a way to partially pay for its big
| corporate-rate cut, the Trump-GOP tax law decreed that
| starting in 2022 companies would have to write off research
| and experimentation expenses gradually: over five years for
| domestic research, 15 years for foreign. This requirement to
| "amortize" the expense over time reduces the value of the
| deduction, increasing corporations' taxable income and
| requiring them to pay more in income taxes upfront. The Ways
| & Means legislation proposes to retroactively reverse this
| provision._
| EFreethought wrote:
| Maybe this is a dumb question, but if you only deduct part of
| their salary in the first year, what happens if you have a
| software developer for several years?
|
| And then what happens after five years if they are still
| around?
| stonemetal12 wrote:
| After five years you are back to the status quo. It is a
| short term problem, long term there is no difference between
| the two. It primarily hurts young companies that don't take
| VC money, and shortens the runway of those who do.
| sarchertech wrote:
| It is much worse for young companies for sure, but it's not
| great for any company.
|
| You're forgoing returns on .1 * salary * tax rate for 5
| years, .2 * salary * tax rate for 4 years... for every
| software dev in the company.
| eadmund wrote:
| > Maybe this is a dumb question, but if you only deduct part
| of their salary in the first year, what happens if you have a
| software developer for several years?
|
| Not dumb at all! In the second year, you get to deduct 1/5
| th of the previous year's salary and 1/5 th of the current
| year's salary; likewise, in the third year you get to deduct
| 1/5 th of the first year's salary, 1/5 th of the second
| year's salary and 1/5 th of the third year's salary.
|
| The key thing is that in the fifth and following years, a
| business would deduct a fifth of each of the previous five
| year's engineering payrolls. This is not great for a growing
| business, but it's murder on a startup trying to grow from
| zero.
| chermi wrote:
| Thus firmly placing this in the regulatory capture
| category.
| PaulHoule wrote:
| See also this long-time tax discrimination against software
| engineers
|
| https://www.taxnotes.com/research/federal/other-documents/tr...
| naikrovek wrote:
| say I work for a company for 5 years as a software developer,
| at $200k/yr the entire time. is this how it works:
|
| year 1: company deducts $40k: 1/5 of the salary for year 1.
|
| year 2: company deducts $80k: 1/5 of the salary for year 2, and
| 1/5 of the salary of year 1.
|
| year 3: company deducts $120k: 1/5 of the salary for year 3,
| 1/5 of the salary for year 2, and 1/5 of the salary for year 1.
|
| year 4: company deducts $160k: 1/5 of the salary for year 4,
| 1/5 of the salary for year 3, 1/5 of the salary for year 2, and
| 1/5 for year 1.
|
| year 5: company deducts $200k: 1/5 of each of my 5 years of
| employment. I leave the company after year 5. Year 1 of my
| employment is fully deducted.
|
| year 6: company deducts $160k: 1/5 of years 5, 4, 3, and 2.
| Year 2 of my employment is fully deducted.
|
| year 7: company deducts $120k: 1/5 of years 5, 4, and 3. Year 3
| of my employment is fully deducted.
|
| year 8: company deducts $80k: 1/5 of years 5 & 4. Year 4 of my
| employment is fully deducted.
|
| year 9: company deducts $40k: 1/5 of year 5. Year 5 of my
| employment is fully deducted.
|
| what is the corporate tax rate? It's not 100%, so you're
| deducting a fraction developer's salary from your income,
| right, you're not saving that much on your tax bill each year.
| you're paying tax on the income you used to pay the developer.
|
| I dunno man. In a world where places like Amazon pay $0 in
| income tax each year, I kinda feel like companies should be
| paying more taxes. companies get all kinds of deductions that
| employees don't get themselves, and will never get. businesses
| have a whole heap of unfair advantages already.
|
| I'm sure the capitalists among you will want me dead for saying
| this, but: pay your fair share. I don't care what the law says,
| pay enough that no one can say that you're a lamprey on
| society, please.
| throwawaymaths wrote:
| modulo accounting shenanigans company like amazon is ~
| unaffected by this rule since its capable of amortizing
| salaries anyways
| OneDeuxTriSeiGo wrote:
| That's not really the issue (and I say this as a socialist).
| The issue is that it's a weak and very leaky definition that
| attempts to redefine anyone that touches "software
| development" away from being taxed like employees into being
| taxed like machines that produce assets at the same value as
| their cost of operating.
|
| This punishes small businesses and new businesses more than
| any large org because it massively increases the cost of
| operating for the first few years.
|
| And importantly it just doesn't do so consistently.
|
| Orgs should have a higher tax burden. This just doesn't do
| that, instead this is punishing orgs for trying to do new
| things and rewarding existing momentum (i.e. the large
| corporations that already have a profitable revenue stream
| and a long trail of employment history).
| naikrovek wrote:
| > it massively increases
|
| that depends entirely on how much the business is taxed.
| every $1 deducted from taxable income is _NOT_ $1 saved in
| that business ' tax payment. It's much more like
| $0.10-$0.30 saved in taxes.
| OneDeuxTriSeiGo wrote:
| Sure but for a startup/new business with little to no
| existing product, that is a massive amount. Especially as
| any software that is abandoned (ex: due to a pivot, etc)
| forfeits the amortised deductions that contributed to it.
|
| The only businesses this hurts are small or young
| businesses that have yet to develop an established
| product and reliably revenue stream.
|
| For them in the best case scenario they make so little
| that they can't even deduct but otherwise this means
| taxes being paid pulling away from the runway that a
| young business has before it builds up a stable income
| stream.
| throwaway7783 wrote:
| Whether it is $1 or $0.10, it is non existent for young
| software companies. If I'm penniless (after real
| expenses), where will I get those 10 cents to pay the
| taxes?
|
| And I'm not making this up. We are about to get cash flow
| neutral in our company, and this law will literally kill
| us and make 20 US citizens unemployed.
| gbacon wrote:
| It is unjust. It is destructive. It actively impoverishes
| all of us. This is where they trot out the cold, detached
| assertion of Robespierre that one has to break a few eggs
| to make an omelet.
| fwip wrote:
| Well, same as any other expense. You find a way to pay
| for it, or you go out of business. If the number is 10%;
| you need either 10% more revenue or 10% less costs.
| throwaway7783 wrote:
| Except its a fabricated expense by _law_. Of course we
| can say "it is what it is, deal with it" for pretty much
| anything.
| sh34r wrote:
| From a more left-wing perspective, it certainly doesn't
| feel like a coincidence that Section 174 kneecaps anyone
| who'd try to compete with the FANG trusts. I'm sure an
| oligarch paid good money to insert this rubbish into the
| tax code. Well, relatively good money. American politicians
| are shockingly cheap to pay off. Probably only took $10k
| each, to convince them to destroy billions in economic
| value.
|
| It's a rare thing these days: a law everyone can hate,
| regardless of ideology. You don't have to be a Laffer curve
| believer to recognize that you can design tax schemes that
| would destroy competition and/or cause excessive deadweight
| loss. After all, if all taxes were created equal, we could
| just replace them with a money printer.
|
| Hopefully it doesn't take three years to reach a consensus
| on these moronic tariffs, which are far more destructive to
| the overall economy.
| mediaman wrote:
| You're bringing up the question of "what is a fair tax rate,"
| which is reasonable.
|
| The questions of this legislation, though, are different:
|
| Should we incentivize companies to hire corporate executives
| instead of engineers?
|
| Should we favor trillion dollar companies over startups? (It
| is much cheaper for Amazon to loan money to the government
| than three people starting a new venture from scratch, so
| this favors concentration.)
|
| If you agree that we should discourage hiring engineers in
| favor of management, that concentration is good, and that low
| corporate tax rates are good, then this legislation is
| perfect.
|
| I say that it's good if you believe in low corporate tax
| rates because this legislation was passed to pay for overall
| corporate tax cuts, which primarily benefits the largest
| companies. Amazon actually pays $11.3 billion in income taxes
| a year (not zero), so on net, even though they have a lot of
| software engineers, they benefit from this legislation,
| because they effectively traded having to float money to the
| government in exchange for lower tax rates.
|
| Big companies care about tax rates more than liquidity,
| because their borrowing rates are cheap, whereas small
| companies care more about liquidity (they effectively cannot
| borrow, or it is very expensive) and their profits are low.
| So this effectively subsidizes big companies at the cost of
| small companies.
| throwaway7783 wrote:
| I agree Amazon should pay taxes. But this bill is not the way
| to make such companies pay taxes. It will kill competition
| and startups along the way. That is the crux of the issue.
|
| Edit: Looks like Amazon did indeed pay 15B+ federal taxes in
| 2024 (excluding sales tax etc)
| floxy wrote:
| Here are some charts and tables showing Amazon income
| taxes:
|
| https://www.macrotrends.net/stocks/charts/AMZN/amazon/total
| -...
| gbacon wrote:
| Even if Amazon pays no corporate income tax (only one
| category out of many), they pay much more in taxes per year
| than you would in several lifetimes.
|
| The phrase "fair share" is political, which is to say
| meaningless. The people who have earnestly invoked this
| phrase in my experience have resisted requests to define the
| term and have sometimes launched personal attacks for daring
| to raise the question. Will you break this streak? What in
| concrete terms is Amazon's fair share? Your fair share? If
| they differ materially, why?
|
| I'm a capitalist and therefore wish zero ill toward you.
| Cronyists, authoritarians, and collectivists may want to
| abuse you, and that is a contemptible way to treat one's
| fellow humans. Both parties to a free exchange benefit. Both
| sides can win because it is not a zero-sum game. As a matter
| of fact, you are advocating for a game that your side cannot
| possibly win. Consider that Amazon has enormous incentive to
| hire the very tippy-top best accountants and tax attorneys to
| find every crack in the tax code that middling staffers and
| nepo hires can barely scribble. It does create some benefit
| to society in the form of the incomes that these highly paid
| tax pros generate, the comforts it affords them, and the
| downstream jobs demand for those comforts creates. But in the
| big picture, it's adversarial rather than constructive.
| Certainly we can come up with a more peaceful and
| constructive arrangement.
| eadmund wrote:
| > what is the corporate tax rate?
|
| 21%
|
| > It's not 100%, so you're deducting a fraction developer's
| salary from your income, right, you're not saving that much
| on your tax bill each year. you're paying tax on the income
| you used to pay the developer.
|
| Which is a problem if you don't have the money to pay the
| tax.
|
| Let's combine your and the parent's examples: 1 principal
| engineer @ $300,000/year; 3 engineers @ $200,000/year =
| $900,000/year. $1,000,000 in sales.
|
| year 1: Company makes $1,000,000 and pays $900,000 to
| engineers for a $100,000 cash profit; it deducts $180,000
| from $1,000,000 for a $820,000 paper profit, and owes
| $172,200 in taxes. Since $172,000 > $100,000, it has a
| $72,000 cash loss for the year. There is not year 2.
|
| Or maybe it raises enough capital to have a cash cushion. A
| similar thing happens in year 2: it makes $1,000,000 and pays
| $900,000 to the engineers for a $100,000 annual cash profit,
| deducts $360,000 from $1,000,000 for a $640,000 paper profit
| and owes $134,400 in taxes, still more than the cash profit.
| The cumulative cash losses are now $106,400.
|
| Once again in year 3 it makes $1,000,000 and pays $900,000 to
| the engineers for a $100,000 annual cash profit, deducts
| $540,000 from $1,000,000 for a $460,000 paper profit and owes
| $96,600 in taxes. Hey, it doesn't owe more than it made in
| taxes! On the other hand, its cumulative cash losses are now
| $103,000. Three years, three million in revenue, 2.7 million
| in expenses but it's in the hole by $103,000, still more than
| its annual profit.
|
| In year 4 it makes $1,000,000 and pays $900,000 to the
| engineers for a $100,000 annual cash profit, deducts $720,000
| from $1,000,000 for a $280,000 paper profit and a $58,800 tax
| bill. It still has a cumulative $61,800 cash loss.
|
| In year 5 it makes $1,000,000 and pays $900,000 for a
| $100,000 annual cash profit, deducts $900,000 from $1,000,000
| for a $100,000 paper profit and a $21,000 tax bill. Good
| news, the company now has a cumulative cash gain! At the end
| of five years and $5,000,000 in sales the capital owners have
| made ... $17,200. The engineers made $4,500,000 and the
| government made $483,000.
|
| In year 6 it makes $1,000,000 and pays nothing (this is very
| unrealistic, because in the real world every product requires
| maintenance ...) for a $1,000,000 cash profit, deducts
| $720,000 from $1,000,000 for a $280,000 paper profit and a
| $58,800 tax bill. People complain that it's only paying a
| 5.88% tax rate, ignoring the years of amortised losses. But
| hey, after $6,000,000 in sales the owners finally have
| $958,400. They take it as a dividend and it gets taxed at the
| top marginal rate, so they pay an additional $354,608 in
| taxes.
|
| In the real world, of course, sales may or may not cover
| salaries, sales may increase or decrease from year to year,
| markets may change and so forth.
|
| > I don't care what the law says, pay enough that no one can
| say that you're a lamprey on society, please.
|
| That's an impossible target. Any random person can say,
| unreasonably, that someone else is a 'lamprey on society.'
| Volundr wrote:
| Forgive the naive question, but is this different than other
| payrolled employees? So for normal employees you get the deduct
| the year it's paid, but for some reason for software developers
| you have to amortize it?
| spockz wrote:
| The logic outlined in other posts is that this is because
| software is seen as an asset that nets dividend. As such,
| like with houses you can't deduct all the costs at once
| because you keep extracting value out of it.
|
| I'm not sure whether I understand why that now applies only
| to software and not other things.
| digitaltrees wrote:
| Those arguments fall short when considering the fact that
| that the construction company deducted the wages of the
| workers that built the house. The software development firm
| is the builder not the home owner.
| jncfhnb wrote:
| If you're building software to use or sell to other
| people you are definitely the owner.
|
| If you're a body shop lending out devs to build software
| for other people, that would be different
| Negitivefrags wrote:
| Theoretically it's the same with any asset you pay someone to
| make.
|
| If you pay someone to make a chair, you don't deduct the
| salary. Instead you create an asset valued at what you paid
| to build it, then depreciate it over time.
|
| The arguement for this is that it would be inconsistent to do
| otherwise. After all, why should buying a chair from someone
| else be different than paying an employee to do it?
|
| It's worth noting that this change brings the USA in line
| with international financial reporting standards, so it's not
| like it's some crazy unique idea or anything.
| doctorpangloss wrote:
| > It's worth noting that this change brings the USA in line
| with international financial reporting standards, so it's
| not like it's some crazy unique idea or anything.
|
| Can you be more specific?
| pc86 wrote:
| If you pay an employee to make a chair, you 100% deduct
| their salary, immediately. The chair is only a capital
| expense if you buy it from a company that sells chairs. The
| company selling the chairs isn't forced to amortize the
| salaries of their carpenters, so implying that it's normal
| for companies to be forced to amortize the salaries of
| their software engineers is, in the most generous possible
| interpretation, a gross misunderstanding of the law.
|
| > _this change brings the USA in line with international
| financial reporting standards_
|
| Which ones?
| Negitivefrags wrote:
| If you pay people to make 1000 chairs that are just
| sitting there, do you really think that you don't have an
| asset on your books at all? This is called Inventory.
| It's certainly an asset.
|
| And an asset doesn't come into existence out of nowhere.
| It comes into existence because you paid money for it.
| And the money you pay for it is indeed the persons
| salary.
|
| Now sure, it's possible to get away with not doing this,
| but it's not correct by accounting standards to do so.
|
| As for which standards, International Financial Reporting
| Standard (IFRS)
| Volundr wrote:
| > The arguement for this is that it would be inconsistent
| to do otherwise. After all, why should buying a chair from
| someone else be different than paying an employee to do it?
|
| Probably exposing how little I know of accounting... If you
| buy a chair you have to track it and deduct it over the
| course of X years?! It's not just an expense the year you
| bought it?
| pc86 wrote:
| Most of the time you can decide what you want to do.
| There are exceptions but for most capital expenses (which
| salary is not despite what proponents of this change
| would argue), you can choose to either deduct all of it
| or amortize it. It also depends how you categorize
| expenses.
|
| A $100 chair is unlikely to get amortized, but a $100
| chair as part of $450k office remodel might.
| PaulDavisThe1st wrote:
| > Theoretically it's the same with any asset you pay
| someone to make.
|
| No, it's not.
|
| Sec. 174 explicitly and specifically refers _only_ to
| software development.
|
| Also, this:
|
| > If you pay someone to make a chair, you don't deduct the
| salary. Instead you create an asset valued at what you paid
| to build it, then depreciate it over time.
|
| is also incorrect. For most tax filers, and for most
| things, under current law, you have a choice whether to
| deduct the expense in the year in which it incurred or to
| amortize it.
| IG_Semmelweiss wrote:
| "Other payroll employees" is doing a lot of lifting.
|
| The question is really, payroll is made up of builders, vs
| nonbuilders.
|
| Are devs different from other builders? The dirty secret is
| that they are not.
|
| Ford engineers, P&G food researchers, and architect salaries
| are capitalized just like Software development costs.
|
| But, in the case of software development, only those builders
| are getting a nice subsidy.
|
| A world where we treat all workers as expenses is not likely
| since it means the end of US GAAP. So, we must treat all
| builders like builders . There shouldn't be special favors
| for some any specific builder group.
| floxy wrote:
| >Ford engineers, P&G food researchers, and architect
| salaries are capitalized just like Software development
| costs.
|
| I'd say the majority of the posters on this thread who are
| answering questions (as opposed to asking questions)
| believe this is not the case. What is a good source for
| learning more about which categories of employee salaries
| are amortized? Besides becoming a CPA.
| pimlottc wrote:
| How does this compare with other types of engineers/employees?
| api wrote:
| Doesn't this also unfairly penalize bootstrapped companies? VC
| track companies seldom have taxable profits.
| the-rc wrote:
| Does it apply to solo companies that provide software
| consulting to others? I guess it doesn't for S-Corps, because
| of passthrough, but might for C-Corps?
| jameshart wrote:
| If you sold the software asset to another company you don't
| get an asset on your books.
| mrbonner wrote:
| Also sounds like a staging bonus RSU scheme in tech firms,
| isn't it?
| hinkley wrote:
| Let's be honest. At a bunch of shops the engineers hired in
| year 2 will never be properly recouped because the company will
| be out of business in less than 7 years.
| digitaltrees wrote:
| Start ups are hard, most fail. But what rational national
| policy makes is several orders of magnitude harder to succeed
| during the riskiest period by adding tax provisions on
| pretend profits?
| davidgay wrote:
| 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.
| eslaught wrote:
| Or any company in its first 5 years of operation. (Or _any_
| company, period, within the first 5 years of the law being
| introduced.)
|
| It takes 5 years to fill the pipeline, so even if the steady
| state would be fine, getting to that state might be
| impossible.
| PaulDavisThe1st wrote:
| > Or any company in its first 5 years of operation.
|
| No! Any company (with software development expenses) for
| the first 5 years after Sec 174 went into effect!
| digitaltrees wrote:
| Most startups won't make it five years especially if they
| have to raise or borrow money to pay taxes on phantom profit.
|
| There is no rational basis for this tax change it was a
| vindictive attack on blue states in the first Trump admin and
| an attack on California and SV in particular along with the
| SALT tax changes.
| hn_acc1 wrote:
| This. They hate CA and will do anything to try to make them
| look bad because we call out their BS. See Los Angeles
| right now as an example.
| dsizzle wrote:
| It's also bad because of the time value of money (deductions
| in the future are worth less than deductions now).
|
| But I agree that much of the outrage seems due to a confusion
| that 80% of the deduction is lost completely (vs deferred).
| kazinator wrote:
| > _If you pay a software engineer, that 's not "really" an
| "expense", regardless of the fact that you paid them._
|
| If I pay for ... pretty much anything whatsoever ... I cannot
| write it off my personal income tax here in Canada. Not
| housing, not food. Medical expenses will come off the bottom
| not off the top.
| abrichr wrote:
| Corporate income taxes are treated differently than personal
| income taxes. You absolutely can deduct corporate expenses in
| Canada.
| kazinator wrote:
| I didn't mention Canada in order to nonsensically compare
| corporate taxes in the USA versus personal income tax in
| Canada, but because it's a good idea to mention where you
| are if you're writing about taxes.
|
| Yes, corps get all kinds of tax breaks, whereas individuals
| don't.
| hintymad wrote:
| Does Section 175 apply to other professions? For example, if I
| hire a full-time handyman for my office, does their salary
| count as a deductible cost?
|
| Sorry if this sounds naive--I'm genuinely struggling to
| understand why the labor of software engineers would be treated
| differently from other kinds of work. It seems logical that
| either all labor costs should count as costs, or none should.
| If different types of jobs are treated differently, what's the
| reasoning behind that?
| jncfhnb wrote:
| If you hire someone to build you an office or office
| furniture, you are creating a long lived asset so it is
| capitalized
|
| If you hire someone to clean your office, you are not
| creating an asset so it is expensed
|
| Building software is generally creating a long lived asset
| hintymad wrote:
| Thanks. Capitalized expense means the expense can be
| amortized over years? If so, the short-term profit can be
| higher than expensed cost? That sounds bad in this context
| as more profit means more tax. However, the OP seems to
| argue that capitalized expense is good for tech companies.
|
| In the meantime, the parent comment says "Depreciating
| means that if you pay an engineer $200k in a year, in tax-
| world you only had $40k of real expense that year, even
| though you paid them $200k." and then "So the effect is
| that it makes engineers much more expensive". This seems to
| also imply that capitalized expense is worse for tech
| companies?
| PaulDavisThe1st wrote:
| > Capitalized expense means the expense can be amortized
| over years?
|
| In the case of Sec 174, not _can_ but _must_.
| MrDarcy wrote:
| This comment is misleading and misses the point.
|
| When you buy an office chair you capitalize the asset on
| your books.
|
| The chair manufacturer in turn pays wages to a person to
| construct the chair. Those wages are not capitalized, the
| manufacturer deducts them fully when they are incurred.
|
| The main issue is that "software manufacturers" must now
| depreciate those same wages over 5 years. Which is unique
| and does not pass a basic common sense sniff test.
| PaulDavisThe1st wrote:
| > I'm genuinely struggling to understand why the labor of
| software engineers would be treated differently from other
| kinds of work
|
| Trump wanted a large tax cut. To make the numbers look better
| (notably the CBO reporting), Congress looked for ways to
| increase revenues. For whatever reason, they settled on
| software development, and devised Sec 174 to generate tax on
| 80% of s/w developer salaries in the first year it went into
| effect.
|
| Why s/w development? I have seen no indication of the reasons
| for this; I suspect it was perceived as a "rich field" and
| thus suitable for this sort of treatment. Also, somewhat more
| fairly, s/w developers do tend to produce semi-durable assets
| that in some ways are like capital goods.
| jncfhnb wrote:
| If you're building software that is intended to be used for
| longer than a year then it should be capitalized.
|
| The argument on HN is always just complaining that it's
| unfavorable to devs; but it's perfectly reasonable with regards
| to actual tax principles.
| awkward wrote:
| Software engineers hired for custom, in house work are not
| building a fixed piece of software with the intention of
| letting it loose unchanged for the next five years.
|
| Software engineers hired to build product are not exclusively
| building a finished product, and are increasingly necessary
| as part of the expense of operating that product long term.
| Industry trends have gone towards combining and blending
| developement, security, operations, and design.
| patmcc wrote:
| There are businesses that will build a big custom piece of
| machinery. Think a factory or a mine. That may last for 20
| years, but require workers to operate, maintain, etc.
|
| This is handled in existing tax law; building or improving
| a capital asset is amortized, repairing or maintaining it
| is expensed. It can be a pain in the butt, this is why
| accounting is not a trivial profession.
|
| We _could_ (and I think _should_ ) treat software the same.
| Some software engineer work is absolutely creating a
| capital asset. Some is absolutely high-priced janitor work.
| It makes sense to allow for both with your tax code.
| PaulDavisThe1st wrote:
| > Think a factory or a mine. That may last for 20 years,
| but require workers to operate, maintain, etc.
|
| Before Sec 174, s/w development costs were subject to a
| choice: amortization as if they were a capital expense,
| or regular deduction as a normal operating expense.
| Companies could decide which category to put costs into
| depending on the nature of the work (and presumably to
| suit their own interests).
|
| Sec 174 removes that option. Or rather, it narrows it
| significantly. You must be absolutely confident that you
| paid developer X for ONLY maintainance work before
| deducting their salary.
| patmcc wrote:
| Oh, I didn't realize - I knew 174 made it "must
| amortize", I didn't realize it could be done either way
| previously. Very silly indeed how they've done this.
| santiagobasulto wrote:
| What happens if you outsource all that to an "offshore"
| company? Is it considered an expense?
| PaulDavisThe1st wrote:
| Then you have to amortize the costs over 15 years, instead of
| 5.
| phkahler wrote:
| How are software engineers different than other people on
| payroll? Can't they be deducted the same way as accountants or
| other functions?
| TZubiri wrote:
| Mmh
|
| If I paid salary of 100k, and invested 100k. Then I made 0
| profit regardless, actually I would have a loss of 100k?
|
| I guess the difference comes in if I made 200k, so I would have
| a profit of 100k.
|
| Not sure how it affects the pnl, but is it fair to say it
| doesn't affect total tax, just distributes it more evenly
| across years?
| bradleyishungry wrote:
| this is not entirely true and i've seen the exact same comment
| regurgitated with the same exact numbers for the past two
| years. I am not in really in favor of section 174 but i'm tired
| of seeing misinfo. I have discussed this with a CPA multiple
| times and its simplified and blown out of proportion in a way
| that you can't actually have a conversation about it
| JumpCrisscross wrote:
| ...could you expand on what part is inaccurate?
| bobmcnamara wrote:
| One example:
|
| "What they've actually done, congress said, is bought a
| capital good, like a machine."
|
| Replace "like a machine" with "like software"
| bmurphy1976 wrote:
| Your comment would be much more helpful if you explained how
| op is wrong or linked to another resource or prior comment
| that did so.
| e40 wrote:
| _> you have to depreciate that over several years (5 in this
| case)._
|
| 15 years in the case of foreign developers.
| bravesoul2 wrote:
| ELI5: why is this blowing up on HN this particular week in
| 2025. Is there a trigger? As it has been known about for a
| while.
| echelon wrote:
| It's actively being discussed in Congress and is a part of
| OBBBA.
|
| " H.R.1990 - American Innovation and R&D Competitiveness Act
| of 2025 "
|
| https://www.congress.gov/bill/119th-congress/house-
| bill/1990...
|
| > A bipartisan bill reintroduced in Congress last month could
| offer long-awaited relief to small tech companies hit hardest
| by an obscure federal tax change -- one that many founders
| say is threatening their survival.
|
| > Industry groups from the Small Software Business Alliance
| to the National Venture Capital Association and TECNA are
| backing the bill, which sits in committee. Over 100 House
| members have signed on. The bill would reverse the changes
| not just going forward, but also retroactively.
|
| https://technical.ly/startups/r-d-tax-change-reversal-
| startu...
|
| > On May 13, the House Ways and Means Committee passed "The
| One, Big Beautiful Bill." This bill includes several
| provisions that, if enacted, will be important to businesses
| claiming research and development incentives:
|
| > The bill would suspend the current amortization requirement
| for domestic R&D expenses and allow companies to fully deduct
| domestic research costs in the year incurred for tax years
| beginning January 1, 2025 and ending December 31, 2029.
|
| https://www.crowell.com/en/insights/client-alerts/house-
| comm...
|
| > The OBBBA suspends required capitalization of domestic
| research and experimental expenditures for amounts paid or
| incurred in taxable years beginning after December 31, 2024,
| and before January 1, 2030. Under the OBBBA, at the
| taxpayer's election, such expenditures can be: deducted as
| paid or incurred under new Section 174A(a),
|
| https://www.skadden.com/insights/publications/2025/05/the-
| on...
| waynesonfire wrote:
| So, after 5 years, they can deduct the entire salary.. this
| just seems like an incentive to promote long-term employment.
| Doesn't seem like a bad incentive.
| mupuff1234 wrote:
| Can we bundle this with closing the carry tax loophole?
| jsherwani wrote:
| For folks that don't know the background on this, here's a
| layperson summary:
|
| - A business is usually taxed on its profits: you deduct your
| revenue from the cost of producing that revenue, and the delta is
| what you are taxed on.
|
| - In software businesses, this usually means if you spend $1M in
| software development to develop a web app, and it makes $1.1M in
| that year, you'd get taxed on the $100K profits.
|
| - However, a few years ago, the IRS stopped allowing the $1M to
| be deducted in the year it was incurred. Instead, the $1M was to
| be amortized over 5 years, so now the business can only count
| $200K as the deductible expense for that year. So now it's going
| to be taxed on "profits" of $900K. Assuming the tax rate is 20%,
| that means the business owes $180K in taxes, even though it has a
| total of $100K in the bank after the actual expenses were paid.
| So it would have to either borrow to pay taxes or raise venture
| capital, meaning that VC-funded companies would be advantaged
| over bootstrapped ones!
|
| - The letter's goal is to bring things back to how they were (and
| how they are for all other businesses): let businesses deduct
| their actual expenses from their actual revenue, and tax that
| actual profit.
|
| I am neither a lawyer nor an accountant, this is just my
| understanding of this issue.
|
| Edit: Switched the tax rate to 20%. The logic is still the same.
| readthenotes1 wrote:
| Why do you assume a 50% tax rate in the United States when it
| is only 21%?
| quietbritishjim wrote:
| I think they meant "assume" like a mathematician, i.e.,
| pretend it is this simple value to make all the calculations
| easier to understand.
|
| But it's still useful to know the real rate is 21%, thanks.
| cjbgkagh wrote:
| State, city, property, social security tax, other fees and
| levies that should really be classified as taxes. The total
| tax burden can really add up.
| jsherwani wrote:
| In California, the maximum personal income tax rate is
| effectively closer to 50%, which is where my mind went, but
| you're right, it's different for companies.
|
| In my example, the tax rate isn't the point though, it was
| used just to illustrate the math.
|
| The main point is that it makes no sense to require
| amortization of software development expenses. The idea that
| this letter is an attempt to restore rationality in the tax
| code.
| hwillis wrote:
| > a few years ago, the IRS stopped allowing the $1M to be
| deducted
|
| It was Trump's 2017 Tax Cuts and Jobs Act, which amended IRS
| code.
| cjbgkagh wrote:
| It wasn't intended to stick, it's a bad idea that was
| intentionally bad in order to make it easier to reverse.
| rgbrgb wrote:
| I don't follow. What is the motivation of doing something
| intentionally bad to make it easy to reverse?
| cjbgkagh wrote:
| The worse it was the better it worked as a budget fudge
| and it could be included in projections and allow a
| budget neutral bill to be passed. And by being so bad it
| would be easier to reverse as fewer people would defend
| it. There was an attempt to eat their cake and have it
| too.
| freedomben wrote:
| Why is it still in place?
| acdha wrote:
| Republicans really want to cut taxes for rich people but
| they don't want to just straight-up acknowledge a huge
| debt increase for that goal, so they come up with
| different ways to say that something is budget neutral.
| That's why a lot of the 2017 bill cuts were time-limited
| so regular people got the tax cut immediately and would
| hopefully remember it, but the time limit meant that CBO
| wouldn't count it as a long-term debt increase and it'd
| be someone else's problem when those expired and most
| people notice their taxes go up.
| Terr_ wrote:
| There's a risk they'll try to break the Senate rules
| outright [0], by pretending that certain promised-to-be-
| temporary tax cuts now cost $0 to extend.
|
| To put it in domestic terms:
|
| * [January 1st] "Honey, I want to rent a Ferrari, I did
| the math and it fits if it's just one month!
| Pleeeeeease?"
|
| * [February 1st] "Oh, that? It's the Ferrari rental-fee
| for the next month, don't worry, it's an _existing_
| expense, it 's already part of our regular budget, so
| clearly we've proven we can afford it. We'll just have to
| cut back on insulin for the kids."
|
| [0] https://www.americanprogress.org/article/senate-
| republicans-...
| cjbgkagh wrote:
| Because it wasn't bad enough. Look at the fervor it's
| causing now - now imagine if it was worse.
|
| In politics it may seem like a good idea to create these
| time bombs because they can't imagine them going off but
| sometimes they do and here we are. The pied-piper
| strategy with the basket of deplorables was supposed to
| make it easier for Hillary to win 2016 but she didn't so
| we got the bomb going off instead.
| elictronic wrote:
| 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 wrote:
| Uhm, but the Democrats held the House and Senate for two
| years during the Biden administration, which came after
| the Trump tax cuts.
| hn_acc1 wrote:
| @cryptonector - but did they have a 60% margin in either
| house? 50%+1 isn't enough (AFAIK) to undo previously
| passed legislation.
| blks wrote:
| It was done to offset lowering other taxes
| elictronic wrote:
| Reducing taxes on businesses by 30%+ and high earners and
| the middle class by a smaller percentage. It's a direct
| effect of the 2017 Republican tax reforms.
|
| If you want to pass something using only 50% of our
| representatives you have to pay for it with something
| else to balance the change. 60% of the vote and you don't
| care what the Congressional budget office says. The
| primary software development hubs are not Republican
| leaning. The same reason SALT was changed. Voting
| matters.
| thaumasiotes wrote:
| The other responses have the right idea, but in more
| detail:
|
| All congressional bills receive an estimate of their
| budget impact over the next ten years. Whatever happens
| after ten years doesn't count.
|
| The politics are that a bill should have no budget impact
| within that ten-year window. As an uncharitable stylized
| example, you'd propose to start paying random subsidies
| to constituents immediately in the amount of $200M /
| year, forever. 8 years out, you also plan to raise taxes
| on somebody else, someone who would never vote for you in
| a million years, in the amount of $1B / year, which may
| or may not fade out after two years. This is a bill with
| no budget impact.
|
| It doesn't matter, to you, whether that spike in
| collections for years 9-10 actually happens or not. If
| you failed at targeting it exclusively to people you
| hate, you might prefer that it doesn't.
| gertlex wrote:
| > > a few years ago, the IRS stopped allowing the $1M to be
| deducted
|
| > It was Trump's 2017 Tax Cuts and Jobs Act, which amended
| IRS code.
|
| And took effect in 2022 (per what I've read elsewhere, and
| other comments on this post; could be off by a year)
|
| (just clarifying that the effect was "a few years ago", but I
| agree that it's important to know the origin of it, which you
| were pointing out)
| jll29 wrote:
| That's a great explanation, thanks a lot for sharing it.
|
| Some big tech companies affected have laid off teams around the
| world, perhaps in order to mitigate the numbers looking bad to
| investors; so in a way, this adversely affected tech employees
| globally.
|
| Every country should have such a rule for software businesses,
| which is an industry where all the cost has to be upfronted, so
| that bootstrapping is facilitated. There are plenty of smaller
| markets where the VC model is not the most appropriate funding
| instrument.
| tossandthrow wrote:
| While this does convey the idea, the premise is also biased.
|
| > even though it has a total of $100K in the bank after the
| actual expenses were paid.
|
| People running a business can perfectly understand the concept
| of liquidity. And yes, just because you transform money to
| something else, then it doesn't mean that you should not be
| taxed on it.
|
| The extreme example is a company that buys gold on the last
| trading day of the year - now there is no profit! On the first
| day they sell the gold again and does tax eviction.
|
| The core question is to what extend software constitutes an
| asset or consumption.
|
| (Personally, I do not believe that software constitutes an
| asset in any meaningful way, but a practical tradeoff could be
| that software is a 10% asset)
| pfannkuchen wrote:
| Doesn't that just defer the tax until later?
| teeray wrote:
| > The core question is to what extend software constitutes an
| asset
|
| Maybe we can finally deduct all that technical debt.
| ncruces wrote:
| If a software project fails can we claim depreciation, like
| after a car crash?
| abeppu wrote:
| > The core question is to what extend software constitutes an
| asset or consumption.
|
| Isn't part of the problem with our industry that, even it is
| an asset, its value can be hard to determine even for a long
| time after you've written it, and it may be pretty weakly
| related to how much you paid to build it?
|
| - you might have spent a lot on developers last year but next
| year you find out that you're the new Quibi and no one wants
| to use your product
|
| - you might have had a small, tight team and what you built
| turns out to be hugely valuable (like instagram or whatsapp)
|
| - ... and to the degree that the software is part of a
| valuable business, how do you really assign value to the
| software as versus the go-to-market plan, the
| partnership/distribution agreements, etc that helped make the
| business succeed?
| tossandthrow wrote:
| These risks would appear to be the same as a shoe producer
| wanting to bring shoes to market - regardless they are
| still taxed on the value of their inventory.
| ashwinsundar wrote:
| I think you are conflating "software engineers" with
| "software". A business that pays a software engineer doesn't
| automatically receive working software in return, especially
| not in the first year. It doesn't seem fair to assume that
| paying a dev $200k means that the business received an asset
| (some code) worth $200k in return, and thus can be taxed on
| it as if it were an asset producing $200k in profits a year.
| tossandthrow wrote:
| I am not conflating, but the law is. Obviously it would be
| better to have an appraisal of the software - I reckon law
| makers see the cost of producing ad an ok proxy.
|
| Btw,this is how it is done in many construction projects
| also. Like bridges, budings, etc.
| ashwinsundar wrote:
| I don't know how you're supposed to value software. I
| just reread your original post - picking 10% out of thin
| air doesn't make much sense either.
|
| Software is more like a blueprint for a building, it's
| not the building itself. How much is a blueprint worth?
| If 100 architects spent a year on it, does that mean the
| blueprint is worth 100 x salaries? It might actually be
| worth nothing, if the blueprint asks the construction
| team to do something impossible.
|
| Software is even worse though, because at least with
| construction, there are known physical models and real-
| world constraints (like physics) that decide whether a
| design can or cannot be implemented. A piece of software
| written today might be entirely unimplementable and worth
| nothing, but a breakthrough elsewhere in 5 years might
| make it extremely valuable at that time
| tossandthrow wrote:
| I really agree in all your points, and the the 10% would
| be the proposed practical middle ground - but it is
| neither a good model.
|
| I don't know how to tax this.
|
| But I can identify the issue: You can channel your
| revenue into a non-taxible assets that you can bring into
| the next accounting period tax free.
|
| Regardless of this is stocks, bonds, gold, unsold
| inventory, or IP, that is not fair.
|
| I would hope for someone to device something that is fair
| and easy to understand. And then I would hope for them to
| get it through to the politicians.
| usefulcat wrote:
| > The extreme example is a company that buys gold on the last
| trading day of the year - now there is no profit! On the
| first day they sell the gold again and does tax eviction.
|
| In this example, it seems like you're assuming that the
| revenue from the sale of the gold would not be taxable, but I
| don't see why that should or would be the case.
|
| ETA: also, gold is far, far more fungible than any particular
| software
| bryanlarsen wrote:
| AFAICT, that $450K is refundable and transferable. IOW, if you
| make $0 in year two and have expenses of $0 in year two, you'd
| get a tax refund of $100K because $200K of your expenses from
| year one would be applied to year 2.
|
| And it's transferable -- if your company fails, there are
| companies out there that will buy the rump of your company to
| realize the unrealized tax refunds.
|
| Which is why it's usually fairly straightforward to get a
| factor loan to pay those $450K in taxes -- it's backed by an
| asset.
|
| Factor loans are usually expensive with a high interest rate.
| Because you can get a factor loan, the taxes are not going to
| immediately bankrupt the company in the short term, but the
| high interest rates are going to hurt in the long term.
|
| Not a lawyer nor an accountant. Not even an American.
| mediaman wrote:
| NOLs are generally not transferrable in the US (they used to
| be, but now the benefit can only be used if the acquirer of
| the 'rump' continues the existing operating business).
| zajio1am wrote:
| > 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.
| atxtechbro wrote:
| Signed. As a US-based developer, I fully support restoring the
| deductibility of software development expenses. This policy
| change quietly gutted countless startups and engineering teams--
| it's long past time we fix it.
|
| Appreciate YC and folks like @itsluther pushing this forward.
| This isn't just a tax issue--it's about keeping innovation and
| talent thriving in the US. Let's get it done.
| callamdelaney wrote:
| It's just a salary expense, where should software come into it?
|
| Eg
|
| 1m salary costs 100k other costs 1.1m revenue 0 profit 0 tax
|
| Anything else doesn't make sense to me
| bdcravens wrote:
| Are there any sources for the argument why this should apply to
| software and not to, say, farm equipment? The cash flow and
| taxation story seems to be the same.
| xn wrote:
| presumably it's status quo bias
| freedomben wrote:
| When you buy farm equipment, you're getting something that
| (barring manufacturer defects, natural disasters, etc) is
| (nearly always at least) a long-term asset going to be
| providing a very predictable level of value over the next many
| years. Same with computers and things like that. With software
| development, the predictability is almost entirely non-existent
| for new and/or smaller software companies. I've personally
| worked on many projects/codebases that either never shipped or
| threw away huge parts of the code before shipping.
|
| You're not really taking a financial gamble .
|
| Also I think it's worth mentioning that, software engineers are
| people who are paid salaries, while farm equipment is not.
|
| A more accurate comparison would be if instead of buying a
| finished tractor you hired a couple of handymen to come build
| you one from scratch. It may or may not work at all. It might
| end up costing you 10x or 20x or more what you would have paid
| for an off-the-shelf solution (so valuing it at the labor cost
| is a ridiculous thing to do. Who in the market is going to buy
| a custom-built tractor at 20x the market rate?)
| rvba wrote:
| How is farm equipment predictable? Droughts and floods make
| farming unpredictable.
| jandrewrogers wrote:
| The value of farm equipment is independent of its use.
| arturocamembert wrote:
| What's particularly wild about the choice to tax software
| development in this way is that it assumes that code is always
| asset. For companies that are pre product market fit, it's often
| a liability!
| siliconc0w wrote:
| This is where it's really important to use a bug tracker that can
| distinguish between bugs/maintenance and feature development. The
| former can be deducted but the latter has to be amortized.
| SteveNuts wrote:
| That doesn't help whatsoever in this situation, the wording
| does not leave any room for distinguishing bugs/maintenance and
| feature development.
| tzs wrote:
| The law says:
|
| > 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
|
| I don't see why that would not apply to software developed for
| bug fixes or maintenance.
| siliconc0w wrote:
| Read the latest notice https://www.irs.gov/pub/irs-
| drop/n-23-63.pdf
|
| You can deduct internal tools, training, maintenance, data
| conversion activities, installation, distribution, marketing,
| promotion, etc.
|
| So it's definitely worth it to use an issue tracker to tie
| your engineer's commits to bugs and categorize their bugs as
| either feature development or one of these activities.
|
| Depending how aggressive you want to get, if a LLM builds a
| feature that you beta launch and the engineer fixes the LLM's
| mistakes to get it working you can probably argue that is
| correcting errors or defects in software that isn't adding
| new functionality and thus deductible.
| wg0 wrote:
| I wonder what has happened to the US legislators. Don't they do
| their homework or too desperate to patch the huge budget deficit?
| cesarb wrote:
| Forgive me if this has already been answered in one of the other
| threads (I haven't been following them), but:
|
| How does this work in other countries?
| andrewl-hn wrote:
| It's not amortized. I.e. the company simply subtracts all
| salaries for the year from the revenue and pays tax from the
| difference. Salaries being amortized means on year 1 you can
| only subtract X% of salaries and the taxable amount becomes
| much larger. Year 2 you will use the X% for the second year
| salary and another Y% for the already paid salary of the first
| year. So, the difference becomes less, and the taxes become
| less, too.
|
| For a stable company that has a constant revenue stream and an
| established body of workers there's no much of a difference:
| instead of paying all tax for current year salary you pay 6
| chunks of tax for 6 different years of salaries - which would
| be about the same amount.
|
| For early companies things can be pretty tough. You may earn,
| say 100k in a year one and pay your employee 100k. Your company
| now has 0 in the bank, but for the taxation purposes the
| taxable amount is like (100k - 10% of 100k = 90k), at 20%
| corporate tax that would mean that the company has 0 in the
| bank but owes the government $18k in taxes. It's much harder to
| start a software business in this kind of environment.
| andreasgl wrote:
| In Sweden you have the option to capitalize software
| development costs, under some specific circumstances, but in
| general you would expense such costs immediately.
|
| Some startups do it to window-dress their balance sheet,
| though. But making it compulsory is absurd.
| chermi wrote:
| Can someone steelman the positives for me? I don't see how it's
| anything but pure regulatory capture favoring established tech
| firms. A small company ramping up revenue simply can't handle
| this amortization while a large, established company can.
|
| That being said, I do think there's a little sloppiness in what
| is categorized as "R&D" in the software development. Is code
| maintenance R&D? Bug fixes? Performance improvements? Is it a
| "capital asset" no longer under R&D once it hits production? This
| aspect has always seemed too gray given how much money is at
| stake in taxes.
|
| But again, this complexity is an advantage for more established
| firms with legal departments and the infrastructure in place to
| document everything in order to handle audits. Which, in my view,
| is a form of regulatory capture; this presentation of symptoms of
| regulatory capture is pretty common.
|
| One potential argument I can see is that maybe this balances out
| since presumably the more established firms would have less "R&D"
| as a fraction of expenses to deduct in the first place?
|
| Edited to fix some typos and clarity.
| Analemma_ wrote:
| > Can someone steelman the positives for me?
|
| They're literally aren't any. Treating payroll expenses as
| depreciating assets is insane, and that's why it isn't done in
| any other context-- not in the US or anywhere else in the
| world.
|
| That sounds like a biased explanation, but it's genuinely the
| truth: it was stuck in the Trump's tax bill to help it evade
| budget balancing rules, but was designed to be so stupid that a
| future Congress would "surely" repeal it, after the TCJA had
| passed successfully. This sort of horse-trading happens all the
| time with budgets, but for whatever reason, this provision was
| never undone.
| redler wrote:
| The purpose, if you want to call it a positive, was to be one
| of many revenue increases designed to offset the cost of the
| income tax cuts that were the primary focus of that
| legislation.
| floxy wrote:
| Doesn't this kind of make sense if software is an asset? If
| your company purchases a seat of Oracle or Solidworks or
| Windows 11 or whatever. I don't think you can expense that all
| at one time, you have to amortize over the useful life of the
| software, just like if it was a physical printing press or a
| backhoe. Similar if you were making a software program for sale
| or for use internally, there is the upfront costs associated
| with making the software, and then it gets used/sold for the
| next X number of years. And software never wears out, unlike a
| tractor; that's at least why physical goods are amortized over
| a finite life. Probably the biggest problem is that this
| conceptualization of software might be 20 years out of date.
| jandrewrogers wrote:
| The vast majority of software barely qualifies as an asset,
| since it has no intrinsic value. It isn't like a tractor or a
| factory, which has a non-zero market-clearing price.
|
| A one-off shell script has an asset value of zero after its
| single use but still counts as a long-term capital asset for
| tax purposes.
| chermi wrote:
| Thanks, this is the closest thing to making sense. But it
| still doesn't make sense.
|
| Like you said, this is a pretty weird characterization of
| software. I guess it would make sense to lawmakers who have
| no idea how it works. Combine that with the fact the
| lobbyists pushing this are 99% representing big tech and you
| start to get a picture of how this happens.
|
| Warning- brain dump not directly related to topic, read at
| your own risk. Lol @ software never wearing out. I wonder how
| that works with something like Microsoft windows licenses(as
| opposed to something like 365 which has new "features" every
| year)? I'm actually asking, how do you amortize an "asset"
| that you are admitting only lasts a year? I know SaaS on
| consumer side is categorized as opex.
|
| Does this capital-asset view of software have any effect on
| the attractiveness of SaaS going forward? I know we were
| talking about the development side of things not the
| consumption side, but it seems like this capital/asset
| perspective conflicts with the reality of how software is
| often sold. SaaS is partially justified as the cost of
| 'maintaining' the software (in addition to support and new
| features). The fact that maintenance is required belies the
| perspective that it's a capital asset. Coming full circle,
| this must require the vendor/developer demarcate programmer
| effort between feature vs. maintenance & support. If anyone
| has a sythensis of all of this or reference it would be
| appreciated
| floxy wrote:
| >The fact that maintenance is required belies the
| perspective that it's a capital asset.
|
| I'm not following this. Factories, ships, stamping presses
| all require lots of maintenance and up keep.
| chermi wrote:
| You're right. I was focused on the idea that for software
| to be taxed as a capital investment there had to be a
| time when it was considered a finished product. Like
| building a tractor. I guess the analogy then is how the
| tractor builder is taxed when fulfilling warranties. I
| suppose tractor business can expense as R&D work that
| goes into processes that make it easier to fulfill
| warranties.
| _aavaa_ wrote:
| Each version of the software is a finished product just
| as any particular tractor is a finished product. The
| difference is that I know plenty of physical assets that
| companies buy which see no changes other than maintenance
| over their entire lifetime. I don't know of a single
| piece of software produced which receives _only_ bug
| fixes.
|
| Yeah devs spend their time fixing bugs, but a large
| percentage of those bugs are the result of the software
| needing to work under new conditions or with new version
| of dependencies.
|
| That fundamentally different than a tractor breaking down
| from wear and tear while doing the exact same thing it's
| always done.
| floxy wrote:
| >I don't know of a single piece of software produced
| which receives only bug fixes.
|
| TeX
|
| https://web.archive.org/web/20190428184722/https://texfaq
| .or...
| gnopgnip wrote:
| Generally the US requires valuable assets to be depreciated and
| amortized over their useful life. This is arguably a fair way
| to tax businesses with fewer downsides than many alternatives.
|
| Consider a different situation, a business pays employees to
| build a residential home for $275k total, the land is worth
| zero in this simple example. Currently they can deduct $10k a
| year for 27.5 years to depreciate the home, even though they
| paid $275k up front. Allowing the business to deduct the entire
| $275k at once, only recovering the difference when the
| depreciated asset is sold is basically a tax free loan at the
| expense of all other taxpayers.
|
| To be fair there are many situations where the government wants
| to incentivize spending in certain areas. Certain types of
| businesses can avoid depreciation and deduct full expenses,
| like for farm equipment and heavy duty vehicles, previously
| most R&D. Or where accelerated or bonus depreciation is used
| because most of the income is in the first few years. Like a
| taxi follows a 5 year double depreciation schedule, in the
| first year a $25k taxi would depreciate $10k, then $6k the next
| year, there are many examples that are on a shorter schedule.
|
| Keeping a 5 year straight line depreciation on R&D benefits
| large established businesses and burdens startups, this is
| primarily a political decision and not economic. Another issue
| is that not all R&D spending results in a valuable asset with a
| usable life
| thinkindie wrote:
| I believe that this is and similar example are missing a very
| important point in the narrative: in case of developing land
| to build a building, you will still have the possibility to
| deduct 100% of the salaries of the construction workers.
|
| Those construction workers will build the building (= the
| product) on top of the land that you acquired (another asset)
| which means you are assets become the land itself and the
| building. Land and building will have their own asset value
| (purchase price or evaluation) that will be used for over X
| years.
|
| As far as I understand as an European watching this from
| abroad, they are trying to evaluate the value of the asset (=
| code, the product) of a startup by using development costs as
| a proxy.
| analog31 wrote:
| I wonder if something like this could also help the hardware
| industry, thus encouraging more manufacturing in the US.
| freedomben wrote:
| Luther et al, would you be willing to share some high level
| statistics about the submissions, such as how many signatures it
| gets?
| rietta wrote:
| This US tax code change directly impacted my small business in a
| very real way that was directly felt by my household. In the
| past, it was a big boon for us and helped me afford to pay for
| some open source work and experimental things that helped our
| customers in the long run. Now we are back to mostly doing work-
| for-hire consulting. Even the experimental work I am doing, I am
| just paying for it and writing it off as typical business
| expenses. I cannot afford to take the credit because that means
| no deduction for this year. I don't have the cash in this small
| business context.
| gg-plz wrote:
| The military is being unleashed against civilians and this is the
| political issue you're concerned about on today of all days?
|
| Dang, you're one of the bad ones.
| dang wrote:
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
| chasd00 wrote:
| wow, i'm going to copy/paste my response to someone upthread
| about how it's a bad idea for HN to get involved in political
| things like this.
|
| "The main issue to me is now every political issue that isn't
| raised here makes HN complicit in its success/failure. Once HN
| starts down this path it can only continue and accelerate or
| else face accusations of support/opposition through silence."
| hcfman wrote:
| Anyone know what the situation in Europe is?
| FirmwareBurner wrote:
| 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.
| TheTaytay wrote:
| Thank you for helping to tackle this. The silence on this issue
| for the past few years from smaller software companies and their
| affiliates was surprising to me. The recent "time bomb" article
| was one of the few media pieces that actually took the time to
| describe it as anything other than a "tax cut for huge tech
| companies", which was refreshing.
|
| My current favorite theory as to why there hasn't been more of an
| outcry is that many companies ignored the rule change (either out
| of ignorance or as an alternative to going out of business), and
| are forced to remain silent.
| charlieyu1 wrote:
| And this benefits big firms because they are the only ones who
| can afford it. Same for most bullshit laws.
| winter_blue wrote:
| > many companies ignored the rule change
|
| How does that even work? You're saying many companies committed
| tax fraud by ignoring the law change and continued to deduct
| software developer salaries as they had in the past?
|
| I find that hard to believe.
| TheTaytay wrote:
| You're right. I take it back - not "most", but I would stand
| behind "many more than is typical for a change to the tax
| code".
|
| It snuck up on a LOT of people, including CPAs, and
| represented tax bills for businesses that were multiples of
| the previous year's tax bill, and sometimes _multiples_ of
| their actual cash profit.
|
| It's also so counter-intuitive that you can't deduct software
| dev salaries, that many people still don't believe it works
| the way the law says it works. If you read the comments here
| and in other threads where this has been mentioned, on Hacker
| News or elsewhere, years into this fiasco, you'll see
| widespread doubt and misunderstanding. Many people equate
| this to the same R&D rules for the older tax _credit_ or will
| argue that it can't possibly work the way the articles say it
| works. People don't magically begin to understand section 174
| just because they run a business, and it's not in their
| financial interest _TO_ understand how it works. Many can't
| afford to.
| codingdave wrote:
| Signing a letter is fine, but will not have the same impact as
| phone calls made to your representatives.
|
| https://5calls.org/why-calling-works/
|
| You don't need to use that site - the point is that if you want
| to have the loudest voice, make some calls.
| sergiotapia wrote:
| Ok, say I call. What do I say: "Hey I want to show my support
| for the Big Beautiful Bill because it reverses the tax
| deduction for software engineers."
|
| And then what? (asking honestly lol for anyone who's done this
| before)
| codingdave wrote:
| Say whatever you feel. They will listen to you and sort it
| out into support or opposition to current legislative
| efforts. You don't have to have a perfect script - just tell
| them what you think. But I would caution you to talk about
| the issues you care about, not telling them you support a
| specific bill. Because they need to know what issues you care
| about so that when legislators propose changes to the bills
| (which always happens), they know whether those changes are
| aligned with what they are hearing from the people. You'll
| note that the letter OP linked to does not say that it
| supports the bill - it supports a specific change they want
| to be prioritized.
| neilv wrote:
| > _Other kinds of messages take longer. Emails have to be
| manually read and sorted. Faxes have to be digitized and
| emailed. [...] By contrast, congressional staffers tally phone
| calls right away._
|
| Golly. Is this a problem? Hasn't this been solved already? Do
| they want to solve it? How much do they want to solve it, in
| terms of United States Dollars?
|
| This is now easy for many HNers to build, with the hard parts
| now done by free off-the-shelf components.
|
| The customer could have those email tallies even faster than
| the phone staffer tallies, for the timely read on constituents
| that the 5calls.org Web page suggests.
|
| And then they can manually or semi-manually review the emails
| later, for nuance and genuine responses. But they got the
| important tallies immediately, on their live dashboard and
| timely alerts.
|
| (But keep those human staffers answering phone calls, since I'd
| guess that AI on phone there would alienate the very engaged
| voters who still make phone calls.)
| skizm wrote:
| I'm curious: what was the original argument for this special case
| of counting anyone involved in software dev as an asset instead
| of an employee?
| tomschwiha wrote:
| The idea is, that there is some asset generated by the devs
| (software, etc.). Same as a machine that you buy and that
| generates revenue over time (and loses value over time). So the
| work result (the software) of a dev generates revenue over time
| and the costs are spread over time as well.
| skizm wrote:
| I guess I'm preaching to the choir here, but a machine has
| re-sale value outside of what it produces, which is what
| actually makes it a "asset". This argument could be applied
| to any knowledge worker that makes a spreadsheet since you
| can sell the spreadsheet.
| tomschwiha wrote:
| I'm not sure if I can follow your argument. A software dev
| usually works on something that is actually sellable (the
| spreadsheet software itself or a SaaS platform). If we take
| Facebook the platform as an example, for sure you could
| sell the software. Or a startup like Windsurf that gets
| bought because of the software they developed. So from my
| perspective devs actually create assets.
|
| If there should be tax discounts to make it attractive to
| develop software is the political decision.
| kogus wrote:
| I'm going to be that guy and just say that one of the many many
| harmful side effects of income taxes is the kind of social
| engineering power it gives politicians, who are neither qualified
| nor properly motivated to make good decisions with such tools.
| Income taxes are an unethical pollution to our society and
| government.
| SteveNuts wrote:
| What do you propose instead?
| kogus wrote:
| In principle, I do not think the income tax _should_ be
| replaced by anything at all. Most federal spending is either
| unnecessary or actively harmful. But practically speaking, I
| 'd suggest a federal sales tax combined with a Universal
| Basic Income subsidy to all citizens (e.g., everyone gets a
| check for $X every month). The subsidy would cover the
| increase in prices for anyone below a certain income level -
| it would effectively produce a progressive tax structure
| without the privacy infringement. There would be no loopholes
| or exemptions to think about either.
| downrightmike wrote:
| We need zero interest rates back to actually get this to work,
| because that means essentially zero risk to any project. even
| s174 can't do that.
| righthand wrote:
| Could LLM companies be lobbying to remove this tax incentive in
| hopes to help kill the job?
| daft_pink wrote:
| 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.
| btilly wrote:
| 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 frame. Also that big bill introduces its own
| problems. A future Congress with debt financing problems may
| not realistically have the freedom to revert terms such as this
| one.
| throwawaymaths wrote:
| the real question is why is r&d for startups _in general_
| amortized in the first place? doesn 't this discourage startups
| pursuing risky hard science ventures?
| fsckboy wrote:
| the reason property plant and equipment is amortized over time
| instead of expensed right away is to match up the tax deduction
| with the profit. If building a factory and filling it with
| robots will produce cars over a 10 year period in the future,
| it makes sense to subtract those costs over the same 10 year
| period. Matching profits with expenses is essentially why
| accounting was invented in the first place, so financial
| statements would show smoother and continuous operation of a
| smooth and continuous company, instead of big peaks and valleys
| as if something had happened.
|
| With software companies, developing software (like Microsoft
| Windows) allows you to profit from that software over the next
| 5 years. Matching profits with expenses makes rational sense.
|
| Frequenty, politicians use the tax code to implement popular
| social policy. This way they can reward things and groups they
| want to, and still be able to say "we aren't giving subsidies,
| we aren't giving people cash, we are simply giving tax
| deductions and tax credits" These sorts of programs are, across
| the board, more distorting of the economy and make the tax code
| incomprehensibly more complex. But matching expenses against
| profits? makes perfect sense.
| yieldcrv wrote:
| It's in the big beautiful bill what's the issue?
| jollyllama wrote:
| Why is it that tracking expenses as R&D is bad? Where I work, we
| started tracking our R&D hours compared to other work recently,
| and an increase in R&D hours has resulted in _less_ tax burden.
|
| Edit: not sure why the downvote, it's an honest question. I'm not
| arguing anything.
| CodesInChaos wrote:
| Having to pay taxes earlier hurts liquidity. This is
| particularly problematic for small companies growing quickly,
| such as startups. For VC financed companies it means that they
| need to raise the money to pay the ta when they're still
| smaller, and thus have a lower valuation.
| anigbrowl wrote:
| I seem to remember people being broadly in favor of this change
| at the time it was first proposed because it would elevade
| software development and create more long-term stability, but in
| a world where the primary focus is on quarterly funding rounded
| and acquisitions it obviously skews the numbers and thus the
| potential founded/early investor upside.
|
| There are two possible motivations for the impending change. One
| is the argument that deducting 100% of developer labor isn't
| ideal because developers create IP whose value can compound as an
| asset, rather than the labor being 'consumed' in production as
| with manufacturing (where any long-term benefit after the initial
| sale goes to the consumer). The other is that it's a legislative
| stick designed to herd a powerful investor/donor lobby into
| supporting budget legislation in exchange for turning the
| favorable tax treatment faucet back on.
| lmeyerov wrote:
| I don't recall there being favorable reception when Trump's
| Congress passed it nor since. At best, non-awareness, and 'cost
| of business' for whatever the other talking points at the time.
|
| You can see the older HN threads, people were shocked, and it
| comes up perennially, with calls to restore favorable tax
| treatment that incentivizes vs punishes business growth. Same
| pattern in social media responses to news articles.
| alistairSH wrote:
| Possibly dumb question... For a medium/large company, is this
| really a big deal? Their payroll is relatively stable year-over-
| year, so after a few years, it all evens out (very roughly). Or
| am I missing something?
|
| IE, is this really an anti-competition law, designed to protect
| entrenched tech industry players and prevent up-starts from,
| well, starting?
| beAbU wrote:
| Based on everything I've read on it in this thread so far, it
| seems like it's pretty much hurting the little guys the most.
|
| Whether this is malicious or intentional or just incompetent or
| something I honestly don't know.
|
| Donald Trump's deeds and behaviour is just about the only place
| where I find myself unable to apply Hanlon's Razor.
| murdockq wrote:
| I've heard that many of the big tech layoffs where actually just
| moved / converting them to contracting groups, so they lose the
| direct head count but kept the developer via the intermediary.
| Have others heard this too and could this have been a way to
| label contractors differently so they don't fall under this tax
| code?
| walterbell wrote:
| Which entity typically owns a software asset created by
| contracted developers?
| processing wrote:
| I built a lightweight grassroots advocacy tool for this.
|
| It figures out who your reps are and sends them a pre-filled note
| based on what matters to you (you can edit/customize it before it
| sends). Includes a call script too if you're up for calling...
|
| https://secure.legisletter.org/campaign/cmbpf5js80000l70d5fn...
| garrickvanburen wrote:
| What inspired working to reverse this now?
|
| I'm all for it, just curious as the law has existed for 8 years
| and been in effect for 3. Seemingly little interest from anyone
| in the tech world to put lobbying behind reversing it until this
| point.
|
| What changed?
| ghc wrote:
| Lobbying has been ongoing since the law was enacted. Congress
| came close to repealing it several times, with the House
| actually passing a bill to repeal it (Tax Relief for American
| Families and Workers Act of 2024).
|
| Just because Hacker News doesn't care doesn't mean it hasn't
| been a big focus of small business lobbying since before it
| came into effect.
|
| The actual reason it hasn't been repealed is politics: It makes
| the CBO budget deficit look much worse. It seems as though
| neither party wants the optics.
| nolok wrote:
| A terrible tax bill during Trump 1 cutting taxes to anyone
| making lot of money and they needed to find some sort of source
| of income to compensate.
| LastTrain wrote:
| Now is the time to strike because there is a very easy to
| manipulate person who will change things like this on an
| emotional whim.
| xyst wrote:
| I would appreciate some transparency. I have seen
| fictional/theoretical scenarios around this simplified to the
| following:
|
| "You have $1M in engineering expenses annually. So now instead of
| deducting $1M per year. Now you can only deduct $200K in that tax
| year. And then amortize it over 5 years"
|
| But we all know this isn't a vacuum. The US tax code is massive,
| corporate tax reduced over decades.
|
| You are telling me this single paragraph in the US tax code is
| directly causing massive layoffs? Or is this single paragraph in
| the US tax code used as a scapegoat to initiate layoffs and then
| used to pump P&L and thus still approve C-level executive
| bonuses?
|
| These big companies have access to massive accounting firms and
| they can't work their fucking magic on a single paragraph of
| text? I call bullshit on big tech.
| GuinansEyebrows wrote:
| i'm torn. on one hand, i simply _do not care_ if business do not
| want to pay more in taxes. in fact, i gladly accept the premise
| that business _should_ pay more in taxes.
|
| in practice, the slippery slope argument is that this will
| entrench big-money players, which i don't support, because
| they'll be the only ones who can afford this. i also fear that
| it'll lead to an irresponsible adoption of "virtual coders"
| because it's cheaper than paying juniors.
|
| kind of a rock and a hard place for me.
| bawana wrote:
| Doesnt this new law inhibit rapid turnover tho? Since it takes 5
| years to get the full deduction of an employee's salary, there is
| an incentive to keep the employee around. OTOH, the souless bean
| counters who want quarterly (if not shorter) time horizons, will
| simply decrease starting salaries and use other methods to be net
| zero. If they do shaft the software engineers, then the converse
| is true-no employee should stay at a job more than a year because
| only the corp will benefit as the deduction grows
| eximius wrote:
| Not clear to me that this is true. The expense was incurred,
| they just claim it over 5 years. It's not clear that the same
| employee is required to be there in subsequent years to claim
| the expense from year 1 in year 2.
| verdverm wrote:
| It doesn't really matter how many devs you have in any given
| year.
|
| What 174 does is make software a capital expense with no
| choice in how it gets depreciated over time. It's like having
| to expense the electricians wages during factory construction
| over 5 years.
| jmcgough wrote:
| The short-term effect is that engineers become more expensive,
| so you can afford to hire less engineers. This creates more of
| a moat for large well-established companies at the expense of
| new startups.
| variaga wrote:
| Not really - it incentivizes having the same _total number_ of
| SW developers for many years, but they don 't actually have to
| be the same people.
|
| If you work at $CORP for 1 year (or 1 minute), $CORP gets to
| deduct the 1/5th of what they paid you for all 5 years, whether
| you still work there or not.
| sergiotapia wrote:
| Signed, thank you so much for organizing this. I hope this change
| is made reality. We must retvrn.
| socalgal2 wrote:
| @dang (and others). If you want a groundswell of support have you
| consider have you considered reaching out to game devs and indie
| game devs? It seems like they'd all be negatively affected.
| They'd spread the word to players.
| dang wrote:
| That's a great idea but I don't know how to do it except by
| posting a thread like this one on HN itself.
| n_u wrote:
| Signed and called my representative and senators.
|
| I ask simply "If I have $1m of revenue and $1m of expenses that
| is entirely software dev salaries, what do you think my profit is
| for that year? How much should I be taxed on that?"
|
| https://www.house.gov/representatives/find-your-representati...
|
| https://www.senate.gov/senators/senators-contact.htm
| TechDebtDevin wrote:
| Hot take. Maybe SWEs making lawyer money was always
| unsustainable.
| croemer wrote:
| There are US taxpayers and/or voters who don't live in the US
| pzo wrote:
| Wish someone in EU do similar signing / votes for lobbying EU for
| taxing US Tech companies or applying 15 years amortization for
| all US products as a revenge - sorry US but 15 years amortization
| for everyone outside US is just worldwide tariff for any other
| software producers, freelancers, etc.
| gortok wrote:
| The SSBA (Small Software Business Alliance) was set up by Michele
| Hansen -- co-founder of Geocodio, http://geocod.io (and the SSBA
| is now run by another person) for this reason -- to raise
| awareness in Washington DC of the issue with the Section 174
| Capitalization changes and the efforts to repeal it.
|
| https://ssballiance.org/
|
| She has also spoken about it on podcasts:
| https://www.youtube.com/watch?app=desktop&v=oF-xsDd1A4o
| jweir wrote:
| The Small Software Business Alliance has been actively working on
| this issue since day one.
|
| https://ssballiance.org/about/engage/
|
| And Michelle Hansen was an early organizer
| https://x.com/mjwhansen
|
| If you work at all in energy, the Clean Energy Business Network
| is also proactive in fighting for change. A couple of years ago
| they put me touch with Ron Wyden's staff. The Democrats are
| almost universally opposed to what was added to Section 174.
|
| https://www.cebn.org/media_resources/house-republicans-advan...
|
| Fight this thing - it is terrible. Not just for software but any
| innovative business in the USA.
| hermannj314 wrote:
| I dont think the word terrible should be used to describe small
| changes to the tax code that make wealthy developers slightly
| less wealthy.
|
| This is an annoyance to rich tech companies. This entire thread
| is propaganda to brainwash us into thinking helping big tech is
| a win for small software devs.
|
| Big Ag did this to small farms. Now big tech is doing it to us.
|
| Do not give these tech lobbyists the weapons to crush small
| developers by acting like they have our best interests at
| heart.
| jweir wrote:
| You know not what you speak of. I am small developer without
| funding.
|
| For every developer I hire I pay tax on 90% of their wages in
| year 1.
|
| So, if I hire a 200k a year developer, I have an increased
| tax liability of 180k. That works out to paying about $75k ~
| $85k. So my 200k developer becomes an 285k developer.
|
| Now, eventually I could regain that cost, or I could do like
| I know of a few companies and commit tax fraud by not
| correctly reporting my expenses.
|
| BTW even as a partner I am hit by this - to correctly file my
| taxes I have to report my retirement savings as development
| revenue and pay tax on what is supposed to be tax free.
|
| Pretty cool.
| hermannj314 wrote:
| Yes, that is how taxes work. Why do you deserve special
| treatment?
|
| If you make software in year one and then sell it in year
| two, stop pretending you didn't create an asset. We aren't
| special snowflakes. We dont deserve welfare.
| soneca wrote:
| My understanding is that the salary of other types of
| workers do not follow this rule.
|
| If that's correct, then the section means software
| developers are actually special snowflakes treated
| differently by the tax code
| hollerith wrote:
| Untrue: for example, if you are a lawyer employed to help
| a company acquire real-estate or another company (i.e., a
| merger) then your salary is treated the same way by the
| US tax code (i.e., your employer must amortize your
| salary).
|
| If you want to argue against the current tax code, point
| out that currently companies do not have to amortize the
| pay of _executives_ even though arguably their work
| fortifies the company 's ability to make a profit in
| future years like the work of software developers does.
| soneca wrote:
| A recruiter, or an HR person in general, do work that
| "fortifies the company's ability to make a profit in
| future years" as you say, by hiring people that will
| hopefully work there for years.
|
| Same as a financial analyst implementing new processes
| and spreadsheets to better control money spending.
|
| One can argue that most white collar worker is investing
| in future profit. Sales people nurturing long sales
| cycles, lobbyists, content marketing, SEO.
|
| Why are software developers (and merge lawyers)
| snowflakes among all those types?
| jweir wrote:
| The guru states to the path to happiness is never argue
| with fools.
| seneca wrote:
| Smothering one of the only prosperous industries in the
| country so we can feed evermore to our bloated reckless
| spendthrift government isn't noble.
| nickff wrote:
| The 'smothering' you speak of is taxing the retention of
| earnings for capital assets. If you think this smothers
| software development, you should look into how much
| capital assets cost in other industries.
|
| Personally, I think we should either eliminate the
| corporate income tax (and increase capital gains taxes
| correspondingly), or allow for all capital spending to be
| written off fully on day one. Your position of treating
| capital spending on software differently makes no sense
| to me.
| e40 wrote:
| You are completely wrong. I run a small software company and
| this is really bad for us.
|
| All this does for large companies is that it might cause them
| to layoff developers.
|
| For a small software company it can threaten our existence.
| bad_haircut72 wrote:
| luckily for me my startup makes no revenue so we're unaffected by
| this :sunglasses:
| doxeddaily wrote:
| This one hit my company pretty hard.
| flambojones wrote:
| Salaries aren't a one-time expense, so is the amortization
| rolling? Like, year 1, you pay me $200k and deduct $40k. In year
| 2, you pay me another $200k, do you get to deduct $40k for year
| 1's salary and $40k for year 2's salary?
|
| I guess another way to ask is, does this mean that if you keep
| someone for 5 years and don't change my wages, is their yearly
| salary effectively fully deductible? If so, does that create
| incentives to try to keep employees longer-term in order to make
| them more cost-efficient?
| iblacksand wrote:
| I also have this question. If this is true, as you note, full
| deduction is only possible if the wage is constant. So would
| this also provide an incentive for employers not to give
| raises, as this 'resets the clock'.
|
| The situation would be that employers want to keep employees
| for at least 5 years, but providing them with raises as an
| incentive to stay is also more expensive than it was
| previously.
|
| Seems like a bit of a mess.
| phyzix5761 wrote:
| There's no difference if you fire and hire a new worker every
| year or you keep them long term. You carry the amortization
| over until its completely written off.
| enceladus06 wrote:
| We should not have carve out for software R&D or anything else.
|
| Business taxes as a whole are stupid and a convoluted mess, just
| let businesses make as much money as possible and roll with it.
|
| It would be much more efficient to tax consumption at a flat
| rate, and give a variable rebate for elderly/children/whatever.
| jfengel wrote:
| Are you suggesting that we eliminate all tax deductions for
| businesses? Or that we eliminate corporate taxes entirely?
| hermannj314 wrote:
| Is lobbying for our interests how we become the bad guys?
|
| I dont want software development to become the oil and gas
| industry.
|
| More specifically, if software devs aren't creating capital
| assets, then what exactly is being bought during an acquisition?
| Don't we tell ourselves our work is building an asset that can be
| reused and sold. The operational aspect of our job still seems to
| be treated as opex.
|
| Our entire industry is built on the belief our software is an
| asset. This feels like big tech wiggling for a tax break but
| disguised as some grass roots effort to help small tech.
|
| I am strongly against this as the ethics feel very wrong. Our
| industry doesn't need tax welfare.
| schroeding wrote:
| IMO, if you lobby for a thing which does not do harm to other
| people, you are not the bad guy. If you do, you are. Lobbying
| itself is not immoral.
|
| The oil and gas industry, and the tobacco industry et al.,
| lobbied (and lobby) for things which they know were (and are)
| doing harm. This isn't the case here, IMO.
|
| Code is not an asset in all (I would even argue most) cases -
| proven by companies which open source the vast majority of
| their code and live from service contracts or certain addons to
| it, and basically pay developers to commit to open source
| software.
|
| Often they buy market- or mindshare. There is no way in hell
| e.g. Akamai wouldn't have been able to bootstrap "Linode 2".
| I'm unable to see the secret sauce why OpenAI couldn't have
| created their own VS Code fork instead of buying Windsurf. But
| why do that if you can acquire their existent customers /
| market share? Additionally, the term "acquihire" didn't plop
| into existence with no precedent.
|
| Being able to immediately get a full deductible for salary,
| which in many (western) countries is the norm for virtually all
| businesses, does not strike me as particularly immoral. It's a
| normal office job, developers do not create gold out of thin
| air.
|
| Big tech isn't even the most affected by this change, they
| (often) have obscene margins - small software companies do not.
| cadamsdotcom wrote:
| While your response is valid, the specific circumstances
| warrant closer consideration and potentially reconsideration.
|
| One problem with the change being appealed is software
| engineers have become more expensive to carry and that has
| contributed to layoffs. Unfortunately there appears no logical
| reason software activities are taxed differently than other
| things you might hire a skilled worker for. When one goes
| looking for a logical and direct motivation for the change it's
| tough to find. This special tax treatment is a one-off, and
| engineers earn high salaries - so is it possible this change
| was to fund some other tax cut? The optics aren't good, at
| least.
|
| Finally and more importantly, this change impacts risky
| ventures & startups most of all since larger tax bills may be
| incurred even on failed ventures. When you look where economic
| growth is coming from, the lion's share is in tech. Higher
| costs and layoffs discourage experimentation and discourage the
| development of a broad range of capability in an organization
| by way of carrying large teams of engineers. It thus
| jeopardizes the current most promising sector in the US
| economy. Yes, tech is also having an "are we the baddies"
| moment - but layoffs and higher costs for startups are a
| separate issue that dominates here.
|
| If you want even further proof just look at how this is
| activating the HN community. Comments are through the roof.
| This issue warrants more than a default response.
| gregdoesit wrote:
| You might be amused to hear that the only exception for Section
| 174 is software developers working at oil and gas companies!
|
| From the legislation:
|
| " Section 174(c)(2) provides that the required ASS 174 method
| does not apply to any expenditure paid or incurred for the
| purpose of ascertaining the existence, location, extent, or
| quality of any deposit of ore or other mineral (including oil
| and gas)."
|
| Is there an explanation how software developers creating
| software for oil and gas companies are different than for any
| other industry?
|
| Or can we assume that the oil and gas industry managed to (yet
| again!) have its lobbyists where it mattered?
| matt3210 wrote:
| This will stay because it's a barrier to smaller companies and
| nothing significant for larger companies that make political
| donations
| Izikiel43 wrote:
| Is this for taxpayers or citizens? Not all taxpayers are
| citizens.
| GuinansEyebrows wrote:
| it's for businesses.
| neilv wrote:
| What other employee roles pretty directly produce assets that
| often have value for the company across multiple tax years?
|
| What kinds of workers who produce IP?
|
| What kinds of workers who build equipment retained by the company
| (not quickly sold)?
|
| And how are taxes for those employee expenses currently handled?
| nextn wrote:
| Does not restoring the tax deduction for software dev in the US
| help solo founders who don't draw salary to compete with large
| businesses?
| cmogni1 wrote:
| Does anyone know how AI coding fits in with S174? If a person's
| "coding" part of the job is primarily running prompts and
| checking code outputs (quality control and minor reprompting)
| with the remainder of the time used for other activities, does
| this count as software engineering?
|
| It seems like an inevitable outcome of this is elaborate system-
| gaming to mitigate how much employees fall under S174...
| micahwhite wrote:
| Sounds like you could use some help building a protest. Try
| outcryai.com and I think you'll find it useful for bringing this
| campaign to the next level.
| physhster wrote:
| I'm afraid most of the damage is already done...
| droptablemain wrote:
| My understanding is that the current "Big Beautiful Bill"
| reverses this
| Atreiden wrote:
| 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 are a few pieces for context, if you're not informed about
| what's in this bill:
| https://thehill.com/opinion/finance/5339440-the-big-beautifu...
| https://archive.is/No4o9
|
| Please, I beseech my fellow Americans, do not vocalize any
| support for this bill. We'll correct the ills of the 2017
| administration in time, but this is not the way to do that.
| rbultje wrote:
| > 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.
| throwanem wrote:
| So because this is something we can do now and we want to do
| something now, we do this?
| vkou wrote:
| Supporting this is making a deal with the devil because he
| offered you two bottles of whiskey.
|
| Its penny-wise and pound-foolish.
| rbultje wrote:
| The opposite of what you're saying is "perfection is the
| enemy of progress", so let's move past them. I'm asking for
| more than "this is not the way". What is the way? How will
| we do this? This is critical, and we've failed to do
| anything since early 2022. Democrats are clearly not at all
| interested. My (Dem) congressman responded directly to my
| enquiry with "fixing section174 just wouldn't be good
| optics". I agree republicans can't be taken very seriously
| either if OB3 is the highest of highs. But we all want this
| fixed. So: how?
| the_arun wrote:
| Why payment to Software Engineers is not an expense for the
| current year? Is it because of the size of the expense? or some
| other rule that I am missing. Those employees are also paying
| taxes to those salaries as well. Isn't it? What is the catch? I'm
| confused.
| jeremyjh wrote:
| Work on product is typically classified as R&D expense. R&D
| salaries are considered to be developing a capital asset that
| will yield returns for years. So the costs of it also are
| amortized over years. Bog standard accounting. The prior
| situation was actually an exception.
| strawhatguy wrote:
| another illustration why income taxes in general are bad.
| justinzollars wrote:
| I support this and am willing to help.
| phyzix5761 wrote:
| I've written on here a few times about this. This is part of the
| reason the job market is so difficult right now for software
| engineers. Let's get this changed!
| nullc wrote:
| An obvious alternative would be tying it to any resulting
| copyrights and patents, without either there is no asset.
___________________________________________________________________
(page generated 2025-06-09 23:00 UTC)