The weird scaling is what's called in accounting the "half-year rule." Any depreciable expenses are assumed to have been incurred halfway through the year, so the first year you can only deduct half of the normal amount (and the other half of that is in the last year + 1 of the depreciation period).
Let’s say you have $100 in revenue, $100 in salary expenses and $50 in other expenses.
Pre 174 you would be considered to have a loss and wouldn’t pay taxes on profits since you don’t have any.
However, post 174, since you’re amortizing salary expenses, you can only deduct $20 out of that $100 (actually the scaling is a little weird I believe, so it’s even worse and the first year you can only set aside 10%), so as far as the IRS is concerned you made $100 in revenues and $50 + $20 in expenses, so you had a profit of $30. So somehow you now need to find actual cash to pay for the $30 in profits when in reality you’ve paid out more than you’ve made.
This just means you have to raise more funds for something that is not returning any value to you.
Your competitors abroad don’t need to do this. Your deep pocketed large competitors don’t need to do this. They have cash to pay and they will get the money back in 5 years, a time which you may not even survive to receive that set off.
This is the worst kind of policy because it doesn’t even make the government more money (the overall tax deduction is still largely the same) but it makes things way worse for companies.