[opt1c]

Imagine you're a small business that makes $1m ARR and you employ 5 software engineers at $200k per year. Your net income is 0.

Prior to this change in the tax code, your software labor costs for that year would all count against your income so you'd be taxed on $0 in profit.

With this tax code, you can only amortize 10% of software labor in the first year so now your business just had $900k in profit as far as the IRS is concerned. You now have to pay ~200k in taxes. You have to come up with that money somehow, and for most businesses the only short-term option is a combo of reducing costs (layoffs) and loans.