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Most people are missing is that there was a tax code change as part of the Trump tax cuts that made engineers much more expensive in the short term. Companies,

by mempko 2y ago

Most people are missing is that there was a tax code change as part of the Trump tax cuts that made engineers much more expensive in the short term. Companies, especially startups, were hit with a high tax bill. The layoffs are, I believe, a direct result of this tax change.

PaulHoule 2y ago
Yes! And so few people are talking about this one.
rogerallen 2y ago
Would like to hear more about this. I thought there was an effort to adjust this...did that fail?
xutopia 2y ago
Wait... how can I learn more about how this affects engineers?
- ricktdotorg 2y ago
  look up "IRS Section 174 changes". here is a decent link, specific to startups[0]. but a simplified TL;dr is that companies used to be able to expense that year's R&D costs (including salaries for developers etc) in that same taxable year. now, that is no longer the case, and companies must amortize those R&D costs over 5 years. this is not ideal. [0] https://www.axios.com/2024/01/20/taxes-irs-startups-section174 https://www.axios.com/2024/01/20/taxes-irs-startups-section1...
- sifar 2y ago
  This is a good explanation. https://blog.pragmaticengineer.com/section-174/ https://blog.pragmaticengineer.com/section-174/ A recent bill has given relief for the domestic amortization but is still stuck in the senate. https://gop-waysandmeans.house.gov/wp-content/uploads/2024/01/H.R.-7024-Section-by-Section.pdf https://gop-waysandmeans.house.gov/wp-content/uploads/2024/0...
rogerallen 2y ago
Found this HN thread https://news.ycombinator.com/item?id=38633668 https://news.ycombinator.com/item?id=38633668
senordevnyc 2y ago
My suspicion is that the vast majority of companies out there (especially small companies) are just not complying with this change. It's such a stupid, company-ending change that it makes way more sense to just classify your engineer time such that you don't have to amortize their salaries, and risk the audit (which is pretty unlikely).

by mempko 2y ago

PaulHoule 2y ago

Yes! And so few people are talking about this one.

rogerallen 2y ago

Would like to hear more about this. I thought there was an effort to adjust this...did that fail?

xutopia 2y ago

Wait... how can I learn more about how this affects engineers?

ricktdotorg 2y ago
look up "IRS Section 174 changes". here is a decent link, specific to startups[0]. but a simplified TL;dr is that companies used to be able to expense that year's R&D costs (including salaries for developers etc) in that same taxable year. now, that is no longer the case, and companies must amortize those R&D costs over 5 years. this is not ideal. [0] https://www.axios.com/2024/01/20/taxes-irs-startups-section174 https://www.axios.com/2024/01/20/taxes-irs-startups-section1...
sifar 2y ago
This is a good explanation. https://blog.pragmaticengineer.com/section-174/ https://blog.pragmaticengineer.com/section-174/ A recent bill has given relief for the domestic amortization but is still stuck in the senate. https://gop-waysandmeans.house.gov/wp-content/uploads/2024/01/H.R.-7024-Section-by-Section.pdf https://gop-waysandmeans.house.gov/wp-content/uploads/2024/0...

rogerallen 2y ago

Found this HN thread https://news.ycombinator.com/item?id=38633668 https://news.ycombinator.com/item?id=38633668

senordevnyc 2y ago

My suspicion is that the vast majority of companies out there (especially small companies) are just not complying with this change. It's such a stupid, company-ending change that it makes way more sense to just classify your engineer time such that you don't have to amortize their salaries, and risk the audit (which is pretty unlikely).