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encoderer parent
Yes absolutely. People who call this is death sentence; well that’s a bit dramatic. The corporate tax rate is 20% so what this is really doing is making every employee 20% more expensive.

If headcount stays stable eventually you go back to your 2021 taxes. If you keep growing, you keep feeling the pain.

That said, this is absolutely insane and I sincerely hope congress fixes it. Small companies are definitely squeezing raises, laying off and changing hiring plans.

gamblor956
Thats...not how income taxes work. Companies still get the same deduction for R&D wages, they just take them over time instead of all at once.

You can thank FAANG for its abuses of the R&D deduction for these changes.

encoderer OP
You just said the exact same thing I said. What part are you confused about? The part about if you keep growing you keep feeling the pain?

Since you mention it — this has nothing to do with fang and was entirely about “paying for” trumps 2017 business tax cut as it was scored by the cbo. As a tax attorney I’m sure you realize the section 174 changes impact business activities beyond what’s allowed under the r&d tax credit.

I’ll be candid, your brevity and snark sort of make you look like an ahole here.

gamblor956
My last paragraph is a direct response to your claim that the 174 changes are "insane" by pointing out that the changes are not insane and are directly instigated by tech's abuse of tax rules (of which section 174 was just one abuse; see also IP migrations, double-dutch structures, etc.)

While the section 174 changes also effect other industries that embraced tech-style accounting (mostly biotech), they generally had minimal impact on other industries because most other industries already capitalized IP derived from R&D...which is why there hasn't been any impetus to eliminate this change.

And quite frankly, many of my non-tech clients were pretty happy that the playing field was finally leveled for tech companies. The abuse of the R&D loophole let tech companies invade other industries for the worse.

I’ll be candid, your brevity and snark sort of make you look like an ahole here.

Brevity is a virtue. And your response was snarkier and ruder than my reply to your comment.

JamesBarney
Most FAANG's are fine since their profitable and have access to cash. The real hit is startups, especially smaller or bootstrapped ones which will now have a much higher tax bill.
ganoushoreilly
Exactly, all this does is disproportionately affect smaller firms. This was by design.
okdood64
Exactly.
encoderer OP
Exactly.

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