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by kevstev 638 days ago
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.
2 comments
anon7725 638 days 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.

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kevstev 638 days 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.

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recursivedoubts 638 days 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
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kevstev 638 days 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?
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recursivedoubts 638 days 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

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