It's not really that black and white. The production of new software would be capitalized, just like the production of basically any other product. Resources/developer time spent on maintence would be deducted immediately, however.
And... if you have to write down an intangible asset you can... and that will reduce taxes accordingly. You can also get loans for intangible assets, use them as collateral, etc. I don't understand what you're saying about not producing software on credit-- of course you can produce it on credit like anything else. You can hire out a firm. Even if you hire a w2 dev you typically have 2 weeks to pay them for work done.
Yes, I should have been clearer that it's not that you can't make it on credit, but you can't use it as collateral. Firms usually buy capital, they don't build it with their own hands; this both means different financial instruments are available to them, and they can liquidate that capital.
(But as I said, my comment is kind of made up)
This is one of the best arguments I've heard. SaaS is valuable because it's Software as a SERVICE. More often than not, the software by itself doesn't have much value without the team with deep domain knowledge supporting, maintaining, and constantly improving it.
It's also illegal to acquire a company primarily to assume it's future negative tax obligations when the capital is depreciated [0], so there really is no way to recoup those costs.
0: https://www.journalofaccountancy.com/issues/2021/feb/tax-ben...
Under the logic of this rule, a firm making a software product could invest money in software development, produce the necessary software, then get income from the software without further investment in software development.
In practice this is never the case; revenue gained from software needs to be met with further software development to maintain, update, secure, etc. the software. Firms that invest in capital often have large startup costs that go down as the firm becomes fully capitalized. Software development costs seldom go down, but instead expand with the firm's success. This is counter-evidence to the idea software is capital.
The software produced is also of unclear value and is not fungible. If a firm buys manufacturing equipment and the enterprise is unsuccessful they can sell the equipment. In the case of an unsuccessful enterprise the software almost always is of zero resulting value. Given these rules if a firm invests money in software development, makes some revenue, but ultimately doesn't create a sustainable enterprise, 100% (or more!) of the profits could go to taxes with no ability to recoup the overtaxing when the firm is dissolved.
Additionally, a firm buying durable goods will be able to buy those goods on credit, using the durable good as collateral. The tax laws encourage this process and amortization makes sense. Software cannot be produced on credit, and in practice can never be used as collateral on a loan.