“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“

Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf

Original article about Section 174 tax code causing layoffs

https://news.ycombinator.com/item?id=44180533

Post from @dang with more info about Section 174

https://news.ycombinator.com/item?id=44226145

Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–70 % below U.S. rates:

• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.

• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.

• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.

In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.

> Companies with capitalized domestic R&D expenses from 2022–2024 can elect a catch-up deduction, which could significantly improve cash flow for firms engaged in innovation.

The US Congress is practically able to pass only a single giant bill every year. To work around its own deficit rules, these bills are packed with taxation time bombs where rules have expiration dates or delayed starts several years in the future.

Then, if Congress doesn’t get around to defusing its own time bombs, you get situations like this R&D expensing fiasco where American businesses and employees pay the price. Unless the bomb is hopefully retroactively cancelled, like happened now.

On top of this madness, there’s an executive branch operating like a runaway autocracy, producing a flood of executive orders that intentionally flaunt laws and even target specific private entities (e.g. Trump’s attacks on law firms that worked for his opponents, and universities he doesn’t like).

How long can a nation function like this? If the bond market loses faith in this process, there could be mayhem. Will be interesting to see if the passage of BBB impacts US debt when markets open again on Monday.

Other theory were AI and interest rates.

I'm pretty sure next rounds of layoffs will have another "good reason".

Personally, I'm still partial to my pet and hard to document theory of "when headcounts go down, share prices go up - and past a certain size and age, the goal of a massive corporation is not to build things any more, but to pay for retirements through the resale / buybacks of shares"

But, hey, BBB is singed, so everything will be awesome soon, I suppose ?

Econ 101: A government deficit increases the net financial worth of the private sector.

The US usually increases the net financial worth of the private sector by around $2tn per year, OBBB should move that to around $3tn per year (CBO estimate https://www.cbo.gov/publication/61486)

If you accumulate a dollar per second in net worth, then you become:

  A millionaire in 11 days
  A billionaire in 32 years
  A trillionaire in 32,000 years

So it's a wealth transfer, from those whose financial affairs will remain comparatively static (your dollar will be worth less via inflation) to those who can capture the new money streams.

The popular story currently is that the massive layoffs were due to the tax/accounting change, but in that case why the big players like Amazon etc have so many layoffs? Or is that the popular story because, while Amazon etc are large, by total employee count most people are employed at smaller business that were more affected by this?

Or was the FAANG stuff actually AI after all? The tax change story sounds more plausible to me but I can't connect everything.

Aside from the direct negative effects: we lose even more to foreign countries who now have even more runway to gain expertise in green energy and sell to everyone else investing in it. Nobody but the 3rd world is increasing investments in coal/oil and there's no money we could make there anyway. So there goes any money we could've made on energy internationally.

Either this country is intentionally being tanked, or we're in the stupidest timeline.

Also, ICE has a bigger budget now than most of the world's militaries[1]. But let's not talk about that.

[1]: https://www.newsweek.com/immigration-ice-bill-trump-2093456

There are companies which I dont understand why they are keeping all the profits and not reinvesting for R&D or other purposes. I must be missing an angle on this. Apart from investors, what else would it be?