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That's still taxed off profits, not gross.
by eschneider 4y ago
That's still taxed off profits, not gross.
- qeternity 4y agoYes, but it's changing the way profits are calculated, which massively impacts cash flows.
- admax88qqq 4y agoIf I can only deduct 200k of the 1m I spent that inflates my net profits by 800k that I dont actually have, because I spent it on what I thought was an expense.
- lokar 4y agoYou deduct (eligible) expenses from revenue to get (taxable) profit
- mminer237 4y agoIf you make $2,000,000 gross, spend $800,000 on operating expenses, and $1,000,000 on R&D, you practically have $200,000 profit; but you have pay $210,000 in federal tax on $1,000,000.
- xmcqdpt2 4y agoWell no, you have a 1.2M profit, and decided to reinvest 1M into R&D to produce a software asset. It's bad that the tax treatment changes suddenly because businesses need stability, but the change itself is perfectly rational.
- tomrod 4y agoIt changes what is considered a deductible expense. Profits = Revenue net Costs Taxes are a cost. Taxes are defined as some rate t, tax = t * (Revenue net Deductible Expenses) So Profits = Revenue - t * (Revenue - Deductible Expense) - Non-deductible Expense Percent of t is small relative to the value of 100% applied to non-deductible expense. What this has done is to take salary, deployment infra, everything, from Deductible to Non-deductible expense, leaving 20% of what was there before. That is very large.