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Comment by seeking_re_msw | Hacker News Reader

do you have a link to the tax change?

surely tax changes come in the form of congressional+presidential bills and amendments

Tax Cuts and Jobs Act of 2017 moved domestic R&E expenditures (including salaries) under IRS Sec 174 from a same-year credit to a five-year amortized expense (similar to capital expenditures). It also amended 174(c)(3) to ensure that software dev is unequivocally an R&E expense[^1].

1: https://irc.bloombergtax.com/public/uscode/doc/irc/section_1...

What the hell? This seems almost purposefully written to destroy the one industry where ordinary people could get good salaries. It doesn't even make any sense whatsoever, just a straight "fuck you" regulation?

It almost surely was either a slap at large tech companies or was meant to generate short term revenue to cover some other cut.

Same thing happened when they restructured tax code to interpret withholdings differently. Everyone saw more on their paycheck temporarily (and they gave speeches about it!) but owed more later if they didn't change their withholdings.

Big tech, ie, large companies who are expected to exist for 5 years with about the same workforce, actually will go back to having the about same benefit in 2027. (They claim 20% of 2022 in 2022, then 20% of 2022 and 20% of 2023 in 2023…) It also covers only development expenses, so sales and legal (a large part of big tech!) are still taken as wage expenses.

So it’s likely the second — and was likely used in part to pay for those very same withholding changes! Or the then-new tax-exemption for lobbying expenses.

Note: these changes were signed into law in 2017 but came into effect in 2022

https://www.resourcefulfinancepro.com/news/irs-section-174-c...

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