Comment on Thousands of Software Engineers Say the Job Market Is Getting Much Worse
resin85@lemmy.ca 5 months ago
The 2017 tax bill that the Republicans rammed through had a time bomb in it for software developers. Starting in 2022, companies could no longer expense R&D costs, and instead had to amortize them over 5 years. This has led to massive tax bills in 2023 for companies. I have no doubt that this is another major factor in the recent tech layoffs.
Take an imaginary bootstrapped software business called “Acme Corp.” This company generates $1,000,000 of revenue per year running a SaaS service. It employs five engineers, and pays each $200,000. That is $1,000,000 paid in labor costs. For simplicity, we omit other costs like servers and hosting, even though those costs can also fall under the new R&D rules, and have to be amortized. So, how much taxable profit does this company make?
In 2021, the answer would be zero profit. In 2022, the answer was $900,000 in profits(!!)
KevonLooney@lemm.ee 5 months ago
That doesn’t make sense because salaries are a current expense, not a capital expense to be amortized. And why 5 years? The work a software engineer does may be outdated in a year or two. Only certain legacy applications are around for 5 years.
The amortization time period is supposed to match the usefulness of the item purchased. Basically, software engineers are an ongoing expense, not R&D.
frezik@midwest.social 5 months ago
Oh if that were true.
KevonLooney@lemm.ee 5 months ago
Those are the legacy applications. This is the survivor bias 100%. You don’t see all the projects that were created and then dumped after a year or two (see Google).
UnderpantsWeevil@lemmy.world 5 months ago
Real laughing-crying emoji hours.
I’ve got a friend who got his job entirely because he’s under 40 and knows Fortran.