Too many people are getting hung up on a philosophical discussion of whether this is the “correct” taxation approach or not.
All of that is a nonsense and a distraction. The tax system is completely arbitrary and made up. It doesn’t matter whether something fits a certain definition or not. The only thing that matters are what the benefits and what the costs of doing a certain thing is.
And it’s pretty obvious that there are almost no benefits and there are massive costs to this approach.
I'm surprised by the lack of discussion about this provision on here. This is the Startup Forum™; I thought it'd be a bigger deal. Unless it's not a big deal in the macro?
For context, this is the Section 174 from the Trump Tax Cuts. Everyone expected it would be reversed before it went into effect, but the 118th congress has been largely unable to pass any legislation.
tl;dr - previously companies could choose 1 or 5 years to amortize, now no choice & clarification that most software development counts as capital improvements (like building a factory). Many smaller companies are getting surprise tax bills this year, many of us have been putting it off with standard tax deferments (6 months)
https://blog.pragmaticengineer.com/section-174/ | https://news.ycombinator.com/item?id=38870429 (blog post by same Twitter user, Gergely Orosz)
https://news.ycombinator.com/item?id=38642461 (older tweet from Gergely Orosz)
https://news.ycombinator.com/item?id=34627712 (largest Ask HN discussion)
It's a shitshow and would definitely contribute to more U.S. layoffs and moving development abroad.
Not sure who benefits from this.
Does anyone know where Trump and Harris stand on this? I believe this is only an issue due to the TCJA.