This Section 174 discourse is so deceptive and disingenuous.
The 2017 tax cuts were a massive gift, particularly for Big Tech. Billions and billions of dollars, just from the cut in Corporate Tax as well as taxes on the repatriation of foreign profits. Oh and apparently dropping that from 35% to 14% wasn't enough, because there's now a push for yet another tax holiday [1], which would save Big Tech at least $75 billion.
So if tech companies want Section 174 changed back to 100% deduction for software development costs, what tax breaks do they want to give back to pay for it exactly?
But the part that grinds my gears is blaming Section 174 for the layoffs. What a joke. Companies use layoffs to suppress wages and get more unpaid work. Nobody is demanding raises when they're in fear of losing their jobs.
If Section 174 was the reason for the layoffs, these companies wouldn't be hiring at the same time they're doing layoffs.
And consider this: if your head count is stable, then amortizing software development costs doesn't really matter. Why? Because you're only deducting 20% of this year's costs but you're now deducting 20% from each of the last 4 years too. So unless your labor costs massively changed, it's basically the same thing.
How about we end IP transfer and paying royalties to foreign subsidiaries in Ireland? Then you can have your 100% deduction.
The 2017 tax cuts were a massive gift, particularly for Big Tech. Billions and billions of dollars, just from the cut in Corporate Tax as well as taxes on the repatriation of foreign profits. Oh and apparently dropping that from 35% to 14% wasn't enough, because there's now a push for yet another tax holiday [1], which would save Big Tech at least $75 billion.
So if tech companies want Section 174 changed back to 100% deduction for software development costs, what tax breaks do they want to give back to pay for it exactly?
But the part that grinds my gears is blaming Section 174 for the layoffs. What a joke. Companies use layoffs to suppress wages and get more unpaid work. Nobody is demanding raises when they're in fear of losing their jobs.
If Section 174 was the reason for the layoffs, these companies wouldn't be hiring at the same time they're doing layoffs.
And consider this: if your head count is stable, then amortizing software development costs doesn't really matter. Why? Because you're only deducting 20% of this year's costs but you're now deducting 20% from each of the last 4 years too. So unless your labor costs massively changed, it's basically the same thing.
How about we end IP transfer and paying royalties to foreign subsidiaries in Ireland? Then you can have your 100% deduction.
[1]: https://www.citizen.org/news/apple-microsoft-poised-to-reap-...