zlacker

This is a rather depressing graph, what happened in 2022-2024?

>>anders+(OP)
Collapse, unfortunately.

>>anders+(OP)
end of ZIRP

>>anders+(OP)
And to put a more depressing angle to the graph, HN and Who's hiring were not that popular pre-2017, and now 2024 numbers are lower than the pre-2017 data

>>anders+(OP)
The tax change that causes companies to have to weirdly treat developer salaries as some sort of asset such that they can only write off 20% of it per year. Outcome of this is killer for startups and causing a huge issue everywhere.

Bottom line: If a company makes $1MM in revenue and pays $1MM in salary, they owe taxes on $800k profit. Yes, this is actually the law now.

>>myth_d+B4
> HN [...] were not that popular pre-2017

Is that true? What happened to change that in 2017?

I've been around longer than that and I admit I haven't seen that much of a difference in engagement around here. But over such a long period it could easily have gone unnoticed by me!

The only thing I've noticed is the increase in activity during the recent Reddit shenanigans (which resulted in a drop of quality of the conversation on HN, but it seems back to normal now).

>>anders+(OP)
Interest rates

>>lubuja+C7
do you have a link to the tax change?

surely tax changes come in the form of congressional+presidential bills and amendments

>>robbie+g1
This and over-hiring.

>>lubuja+C7
> The tax change that causes companies to have to weirdly treat developer salaries as some sort of asset

The salaries are not an asset, they are the cost of creating the asset. They are capitalizable similar to (but on a different schedule than) costs of acquiring software that is not developed in house.

>>seekin+Og
Tax Cuts and Jobs Act of 2017 moved domestic R&E expenditures (including salaries) under IRS Sec 174 from a same-year credit to a five-year amortized expense (similar to capital expenditures). It also amended 174(c)(3) to ensure that software dev is unequivocally an R&E expense[^1].

1: https://irc.bloombergtax.com/public/uscode/doc/irc/section_1...

>>seekin+Og
https://www.resourcefulfinancepro.com/news/irs-section-174-c...

>>lubuja+C7
Has anyone heard opinions from the incoming administration on getting this changed?

I guess the one area this tax law particularly affects are bootstrapped revenue-generating (non-VC funded) startups with high dev costs? i.e., actual running businesses not playing with monopoly money.... which maybe Elon doesn't care about....

>>awongh+Jp
The change was introduced in Trump's tax cuts, so I doubt he will reverse it.

>>freeon+Nj
What the hell? This seems almost purposefully written to destroy the one industry where ordinary people could get good salaries. It doesn't even make any sense whatsoever, just a straight "fuck you" regulation?

>>lubuja+C7
The "Section 174" tax change always gets brought up, but wouldn't that be kind of a "tail wagging the dog" explanation? Surely, if it's worth it for a business to hire talent, then it's still worth it regardless of some esoteric tax rule. Are there actually companies sitting there in their Hiring meetings saying "Gee, we really need to expand our business and hire some engineers--if it wasn't for this tax law, we'd be hiring!"

>>lubuja+C7
How do non-developer salaries affect those taxes?

(In 2024, if a company paid salaries for a software developer, a novel writer, and a cook, does each of those 3 positions affect taxes in the same way?)

>>ryandr+ox
If it becomes meaningfully more expensive to hire talent, it needs to be meaningfully more worth it to hire.

It's more like if before the law was passed they'd hire 5 new devs, now they can only afford 3 and have to make do until more revenue comes in

>>freeon+Nj
Note: these changes were signed into law in 2017 but came into effect in 2022

>>neilv+rz
No, just software devs. Thanks so called "Tax Cuts and Jobs" act.

>>anders+lw
It almost surely was either a slap at large tech companies or was meant to generate short term revenue to cover some other cut.

Same thing happened when they restructured tax code to interpret withholdings differently. Everyone saw more on their paycheck temporarily (and they gave speeches about it!) but owed more later if they didn't change their withholdings.

>>neilv+rz
They're unaffected - the law specifically applies to software development:

    (c) Special rules.
    (3) Software development. For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.

(c.1 and c.2 are the opposite - carveouts for land acquisition and fossil fuel and mining exploration)

>>ryandr+ox
Cashflow problems regularly kill business. Now you need a much higher cash buffer than before (in parent example where is that 800k coming from?). Combine with much tighter VC market and there are definitely many startups closing up shop because of this.

>>_djo_+Zq
Did the change take effect during his administration or after the tax cuts expired or rather after the income brackets also increased? That change was intentional so that the following administration if it wasn't the GOP would feel the heat of and get the blame fortaxes going up.

>>_djo_+Zq
Do you have a reference where I can read more about this, specifically the timelines?

>>anders+(OP)
Interest rates were raised from nearly zero, where they were for a number of years. When the interest rates are that low, high-risk investments like VC are more attractive then alternative (having a low chance of high returns is better than guaranteed no returns at all).

>>jrs235+H71
It took place during the administration.

Another poster had a good summary: >>42379288

>>dgfitz+Nf1
Another poster had a nice summary: >>42379288

>>jvande+sN
Big tech, ie, large companies who are expected to exist for 5 years with about the same workforce, actually will go back to having the about same benefit in 2027. (They claim 20% of 2022 in 2022, then 20% of 2022 and 20% of 2023 in 2023…) It also covers only development expenses, so sales and legal (a large part of big tech!) are still taken as wage expenses.

So it’s likely the second — and was likely used in part to pay for those very same withholding changes! Or the then-new tax-exemption for lobbying expenses.

>>_djo_+kr2
I think this is the more important comment in that thread: >>42380764

"Note: these changes were signed into law in 2017 but came into effect in 2022"

Like I thought, changes were meant to be a time bomb if the GOP wasn't in control.

>>jrs235+T83
Thank you, I missed that and it’s important context. I’ve upvoted your comment for more visibility.