Submitted 3 days ago by MuskyMelon@lemmy.world to technology@lemmy.world
https://qz.com/tech-layoffs-tax-code-trump-section-174-microsoft-meta-1851783502
So Trump set a time bomb for who he thought would be 46 and then lost his re-election. Now he has to fix the mess he created - and if he does he will be hailed as a corporate hero for fixing the tax problem he created.
If he doesn’t fix it he will continue to plunge the future of America into chaos.
Fucking futureless clown people.
He has fixed more problems he created than any previous president. MATSA (make america the same again)
I can’t tell if it’s “the true cause” of the massive tech layoffs because I know jackshit of US tax, but it does make more sense than every company realising at the same time that they over-hired or becoming instant believers of AI-driven productivity.
The only part that doesn’t make sense to me is why hide this from employees. Countless all-hamds with uncomfortable CTOs spitting badly rehearsed bs about why 20% of their team was suddenly let go or why project Y, top of last year’s strategic priorities, was unceremoniously cancelled.
I would not necessarily be happier about being laid off but this would at least be an explanation I feel I’d truly be able to accept
I found out about this about a year ago while I was laid off. It coincided with when the massive layoffs began. Seems pretty likely to me. Developer salaries aren’t low and to lose another 80% on top is a big hit.
Also a lot of my coworkers are really nervous about immigration right now. This is a bad time to be an Indian tech worker in the US. My team of about 10 could wind up reduced to me and one other guy. We’d even lose our manager and every PM. And this team is responsible for critical software at a major company.
This accounts for some portion of it, but the other part is the rise in interest rates. With borrowing money no longer being nearly free, companies tightened their budgets.
It’s not that borrowing money is free, zero interest rates means the government pays zero interest for its loans, not companies. It does put downward pressure on interest rates companies pay but they’re still going to have to pay a couple percent apy.
The reason zero interest rates are good for tech is because it forces capital to seek more long-term and risky investments. If I have a lot of money and can get 6% apy from loaning it to the US government, the safest bet on the market, why would I invest in something else? If i can’t get any money from loaning to the government (zero interest rates), and i cant get much from loaning it to other institutions because of that downward pressure, then maybe I’ll buy some more risky tech stocks because it’s possible for that company to grow more then the 1-2% id get from just lending my money.
When Congress passed the Tax Cuts and Jobs Act (TCJA), the signature legislative achievement of President Donald Trump’s first term, it slashed the corporate tax rate from 35% to 21% — a massive revenue loss on paper for the federal government.
To make the 2017 bill comply with Senate budget rules, lawmakers needed to offset the cost. So they added future tax hikes that wouldn’t kick in right away, wouldn’t provoke immediate backlash from businesses, and could, in theory, be quietly repealed later.
The delayed change to Section 174 — from immediate expensing of R&D to mandatory amortization, meaning that companies must spread the deduction out in smaller chunks over five or even 15-year periods — was that kind of provision. It didn’t start affecting the budget until 2022, but it helped the TCJA appear “deficit neutral” over the 10-year window used for legislative scoring.
The delay wasn’t a technical necessity. It was a political tactic. Such moves are common in tax legislation. Phase-ins and delayed provisions let lawmakers game how the Congressional Budget Office (CBO) — Congress’ nonpartisan analyst of how bills impact budgets and deficits — scores legislation, pushing costs or revenue losses outside official forecasting windows.
And so, on schedule in 2022, the change to Section 174 went into effect. Companies filed their 2022 tax returns under the new rules in early 2023. And suddenly, R&D wasn’t a full, immediate write-off anymore. The tax benefits of salaries for engineers, product and project managers, data scientists, and even some user experience and marketing staff — all of which had previously reduced taxable income in year one — now had to be spread out over five- or 15-year periods.
Cut corp taxes and put the burden on citizens. Gotta love it.
It’s a classic
How is it that we are only learning about this now💀
I remember talking about this at the time. It did get some attention, although the industry was quick to blame other things instead, like AI.
Meanwhile I would argue that most efficiency gains from AI are outweighed by the cost of false positives wasting time and energy, learning prompt engineering, and other testing/fiddling adding overhead.
The delayed change to Section 174 — from immediate expensing of R&D to mandatory amortization, meaning that companies must spread the deduction out in smaller chunks over five or even 15-year periods — was that kind of provision. It didn’t start affecting the budget until 2022, but it helped the TCJA appear “deficit neutral” over the 10-year window used for legislative scoring.
They’re still making money hand over fist. This is yet another shield for the fact that capitalism as we have implemented it is a dog shit system and we at the very least need real labor laws like a civilized fucking country
This is why our tax code is broken. There’s so many hidden bullshit codes and requirements, that people are fucked unless they can actually spend a fortune on accountants and tax lawyers, two professional that we don’t need that many of btw, but our tax code is written to make money and jobs for the rich.
Fuck the feds.
How can it be broken if it works exactly as intended? Same goes for the tax laws in my shitstain country.
I read an article the other day how taxes are a way - and always have been - to redistribute from the poor to the rich. Sounds about right.
Taxes can go either way. It depends on how they were written.
The tax code after the Great Depression allowed for massive expansion of public projects in the U.S. It was 63% for the top earners. During WW2 the top tax bracket was at 94%.
When the boomers were all born the tax bracket was above 70% for the top earners. This high tax bracket is what fueled the creation of a large middle class, public infrastructure, schools, research, space exploration, and the massive military buildup and wars. It also acted as an effective anti-minopoly/oligarchy system because the tax system discouraged it.
Then in the 80’s Reagan slashed the taxes for the top earners down to 28%. its never gotten above 40% since then. Most high earning companies have so many exeptions today that the real tax rate is often 0%.
Because of it the infrastructure built during the 50’s-70’s is degrading and falling apart. Public services are declining and the middle class is shrinking as people become more impoverished.
Fits with the time period where the company I worked for laid off nearly 70 of us and outsourced the department. I’d be curious to see how the numbers run to see if they were actually better off somehow doing so do to this.
lupusblackfur@lemmy.world 3 days ago
What an utterly shocking turn of events. /s
Fucking MAGAt idiots.
🤦♀️ 🙄 🤡 🖕 💩
thisbenzingring@lemmy.sdf.org 3 days ago
I like how your emotes tell a short story