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This is a scapegoat- I see this thrown around in dev forums on reddit all the time. I asked my CFO if this had any impact (small fintech startup of <200 employe

This is a scapegoat- I see this thrown around in dev forums on reddit all the time. I asked my CFO if this had any impact (small fintech startup of <200 employees globally), and he said it has no impact on our planning or any real material impact to our books. This was a small speedbump in the financial statements of alphabet/meta/apple etc, and both revenues and earnings climbed despite the impacts. They kind of even out after 5 years regardless.

anon7725 2y ago
Of course it’s a non issue for big tech. Is it curtailing the total employment across the industry by affecting smaller firms that may be on more of a defacto cash basis in their planning? Big tech are the beneficiaries of legislation that primarily suppresses employment in smaller firms.
- kevstev 2y ago
  Big tech is most affected as they have the biggest r&d budgets? You still have to show a profit to owe taxes which most startups don't have and big tech does. There is a huge bag of tricks you can use to hide or show profit as well. Find me a case study where this has curtailed hiring.
recursivedoubts 2y ago
wow big companies with access to cheap financing aren't bothered by it but it destroys smaller companies that operate on a cash-flow basis, crazy who would have suspected that such a tax regime would be supported by big companies
- kevstev 2y ago
  Can you lay out your understanding of how this works?- I get the feeling you don't even understand the basics. You are only taxed on profits so why would financing even be brought into the conversation?
  - recursivedoubts 2y ago
    yeah, sure: money spent on dev salaries that are dedicated towards "research" aren't fully deductible in the year they are paid, instead you have to depreciate the cost over a number of years. that means your "profits" are higher in the first year because you can only claim a small percentage of the money you actually spent in cash terms. fine for a large company that has access to to financing and/or a large warchest to absorb the hit: in the long run it pencils out, but for smaller/newer companies that are run on a cash basis its brutal and very easy to get into a situation where taxes exceed profit. i think everything should be done on a cash basis in general, so what do I know

anon7725 2y ago

Of course it’s a non issue for big tech. Is it curtailing the total employment across the industry by affecting smaller firms that may be on more of a defacto cash basis in their planning? Big tech are the beneficiaries of legislation that primarily suppresses employment in smaller firms.

kevstev 2y ago
Big tech is most affected as they have the biggest r&d budgets? You still have to show a profit to owe taxes which most startups don't have and big tech does. There is a huge bag of tricks you can use to hide or show profit as well. Find me a case study where this has curtailed hiring.

recursivedoubts 2y ago

wow big companies with access to cheap financing aren't bothered by it but it destroys smaller companies that operate on a cash-flow basis, crazy who would have suspected that such a tax regime would be supported by big companies

kevstev 2y ago
Can you lay out your understanding of how this works?- I get the feeling you don't even understand the basics. You are only taxed on profits so why would financing even be brought into the conversation?
- recursivedoubts 2y ago
  yeah, sure: money spent on dev salaries that are dedicated towards "research" aren't fully deductible in the year they are paid, instead you have to depreciate the cost over a number of years. that means your "profits" are higher in the first year because you can only claim a small percentage of the money you actually spent in cash terms. fine for a large company that has access to to financing and/or a large warchest to absorb the hit: in the long run it pencils out, but for smaller/newer companies that are run on a cash basis its brutal and very easy to get into a situation where taxes exceed profit. i think everything should be done on a cash basis in general, so what do I know