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Section 174 is a harebrained law aimed solely at "punishing" successful engineering companies. It is a Trump-era law designed to appease voters mad at what they

Section 174 is a harebrained law aimed solely at "punishing" successful engineering companies. It is a Trump-era law designed to appease voters mad at what they view as successful big tech "intelligentsia." It will destroy startup culture. I can't wait until we automate the people cheered this law on, out of a job.

lnxg33k1 3y ago
As a software developer I also salute that law, As italian I always voted against governments who wanted to detax r&d, if its done and funded by governments for the collectivity, then it benefits everyone, but if a private company is going to r&d for the benefits of their shareholders, then they can also pay their fair share of taxes instead of leeching from the collectivity I always felt, from outside, that anti trumpers just are against everything he does with simplistic explanation, its a good law amazon has enough money to pay their own r&d
- xvector 3y ago
  > if a private company is going to r&d for the benefits of their shareholders What if the R&D is open-sourced? Or what if the R&D would be for a product genuinely beneficial to people? Think a new drug, or infrastructure like Google Maps, etc.
  - iancmceachern 3y ago
    The people who make a living doing the work need to be paid somehow.
  - lnxg33k1 3y ago
    Those are good points imho, I think If they make a profit with it, then they can also pay for it, its useful for society and society appreciate it with the money they give to it, no reason to pay for it with taxes
    - Murskautuminen 3y ago
      Some products also only make money after a long time of R&D. If you are a startup focused on such a product, R&D tax benefits are critical to keep you alive during your long development time that will require multiple rounds of investment before you can even think of making a profit. For example, a new drug can take 10~16 years to get to the market, and this is intended by government regulations (there is often no way around it). One has to show the drug is safe and works against the intended disease, before one can sell a drug. However, before you can even start this clinical work in humans, you must discover the drug first and optimize it through laboratory and animal testing. Only after that can you enter the clinical stage to test it in humans. Clinical stages are typically divided into phase 1/2/3 and each stage requires more time and money. After you complete all that, you can finally ask for approval to sell your drug at a profit from the government (US Food and Drug Administration (FDA)/ EU European medicine agency (EMA)). This trajectory can typically be divided as follows: Drug Discovery (early lab testing) 2-4 years, $2-15M Preclinical Drug Development (advanced lab/animal testing) 2~3 years, $10-15M Clinical Stage 1 (First in human studies) 1~2 years $15~30M Clinical Stage 2 (medium-sized human study), 2~3 years, $40~60M Clinical Stage 3 (large, longer term human study), 2~4 years $100~300M. Total: 9~16 years of research & development with a cost of $167~420M. Then finally you can sell the drug for a profit. If you are a startup focused solely on such development, you have no way (or very limited ways) to make money/profit in those 9-16 R&D years. In such a case, R&D tax benefits are really useful.
- paulryanrogers 3y ago
  > I always felt, from outside, that anti trumpers just are against everything he does with simplistic explanation Sounds like quite a broad brush. As a former Trump voter (to my shame), I realized he's a broken clock that can be right once in a while; yet still such a profoundly net negative that I'd rather he be in jail than in office. In particular I'm most against his record of sexual assault, association with predators, peeping at young pageant participants, boasting about such things, bending the law and policy to benefit his friends, praise for despots, his demand for loyalty over talent, and racist commentary.
  - lnxg33k1 3y ago
    I realised after writing it that my thought was a bit out of touch, in Italy I had my Trump, in Berlusconi, and I hated everything he said, even if something made sense
- PaulDavisThe1st 3y ago
  Section 174 has nothing to do with "detaxing R&D". The US tax code already requires that self-classified R&D expenditures be treated as capital-expenditures, and subject to a 5-15 year depreciation period. Section 174 requires that any and all software development costs be treated as R&D expenditures, and thus capitalized/amortized. The total tax paid at the end of the depreciation period will be the same, but the upfront tax in the first year of a given expenditure is now 5-15x higher (depending on where the work was done).
kmeisthax 3y ago
> I can't wait until we automate the people cheered this law on, out of a job. If your goal was "foment another wave of far-right nationalism in America", this is a good idea. Judging by the rest of your post, however, I don't think that's what you had in mind.

lnxg33k1 3y ago

As a software developer I also salute that law, As italian I always voted against governments who wanted to detax r&d, if its done and funded by governments for the collectivity, then it benefits everyone, but if a private company is going to r&d for the benefits of their shareholders, then they can also pay their fair share of taxes instead of leeching from the collectivity I always felt, from outside, that anti trumpers just are against everything he does with simplistic explanation, its a good law amazon has enough money to pay their own r&d

xvector 3y ago
> if a private company is going to r&d for the benefits of their shareholders What if the R&D is open-sourced? Or what if the R&D would be for a product genuinely beneficial to people? Think a new drug, or infrastructure like Google Maps, etc.
- iancmceachern 3y ago
  The people who make a living doing the work need to be paid somehow.
- lnxg33k1 3y ago
  Those are good points imho, I think If they make a profit with it, then they can also pay for it, its useful for society and society appreciate it with the money they give to it, no reason to pay for it with taxes
  - Murskautuminen 3y ago
    Some products also only make money after a long time of R&D. If you are a startup focused on such a product, R&D tax benefits are critical to keep you alive during your long development time that will require multiple rounds of investment before you can even think of making a profit. For example, a new drug can take 10~16 years to get to the market, and this is intended by government regulations (there is often no way around it). One has to show the drug is safe and works against the intended disease, before one can sell a drug. However, before you can even start this clinical work in humans, you must discover the drug first and optimize it through laboratory and animal testing. Only after that can you enter the clinical stage to test it in humans. Clinical stages are typically divided into phase 1/2/3 and each stage requires more time and money. After you complete all that, you can finally ask for approval to sell your drug at a profit from the government (US Food and Drug Administration (FDA)/ EU European medicine agency (EMA)). This trajectory can typically be divided as follows: Drug Discovery (early lab testing) 2-4 years, $2-15M Preclinical Drug Development (advanced lab/animal testing) 2~3 years, $10-15M Clinical Stage 1 (First in human studies) 1~2 years $15~30M Clinical Stage 2 (medium-sized human study), 2~3 years, $40~60M Clinical Stage 3 (large, longer term human study), 2~4 years $100~300M. Total: 9~16 years of research & development with a cost of $167~420M. Then finally you can sell the drug for a profit. If you are a startup focused solely on such development, you have no way (or very limited ways) to make money/profit in those 9-16 R&D years. In such a case, R&D tax benefits are really useful.
paulryanrogers 3y ago
> I always felt, from outside, that anti trumpers just are against everything he does with simplistic explanation Sounds like quite a broad brush. As a former Trump voter (to my shame), I realized he's a broken clock that can be right once in a while; yet still such a profoundly net negative that I'd rather he be in jail than in office. In particular I'm most against his record of sexual assault, association with predators, peeping at young pageant participants, boasting about such things, bending the law and policy to benefit his friends, praise for despots, his demand for loyalty over talent, and racist commentary.
- lnxg33k1 3y ago
  I realised after writing it that my thought was a bit out of touch, in Italy I had my Trump, in Berlusconi, and I hated everything he said, even if something made sense
PaulDavisThe1st 3y ago
Section 174 has nothing to do with "detaxing R&D". The US tax code already requires that self-classified R&D expenditures be treated as capital-expenditures, and subject to a 5-15 year depreciation period. Section 174 requires that any and all software development costs be treated as R&D expenditures, and thus capitalized/amortized. The total tax paid at the end of the depreciation period will be the same, but the upfront tax in the first year of a given expenditure is now 5-15x higher (depending on where the work was done).

kmeisthax 3y ago

> I can't wait until we automate the people cheered this law on, out of a job. If your goal was "foment another wave of far-right nationalism in America", this is a good idea. Judging by the rest of your post, however, I don't think that's what you had in mind.