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John Baez (Jun 14 2025 at 10:06):Some folks like @Evan Patterson and @Nathaniel Osgood were talking about how much harder it is for students to get programming jobs these days, and I was wondering about the reasons. This article has a theory about that which is more technical than the obvious ones. Of course there were big tech layoffs starting roughly around COVID. But why?
But, the Tax Cuts and Jobs Act (TCJA) of 2017 amended Section 174, effective for tax years beginning after December 31, 2021. Starting in 2022, R&D expenditures must be capitalized and amortized over 5 years for domestic research (and 15 years for foreign research… which is pretty untenable.) This change eliminated the option to immediately deduct R&D costs, increasing tax liability for companies with significant research budgets in the short term. [....] Anyway, the impact of this tax strategy turned out to be: layoffs of U.S.-based engineers while companies restructured operations abroad. [....]
Basically, as long as spending counted as R&D, companies could report losses to investors while owing almost nothing to the IRS. In short, it costs a lot to invent - and market - the future. Building a better tomorrow can be expensive! Investors generally bought into this, gave them another round of venture capital, and let them defer a public offering. (This is actually another problem with this model - companies have stayed private far too long - but I’ll address that at some other point.)
But the Section 174 tax change absolutely cratered that model.
Ivan Di Liberti (Jun 15 2025 at 10:36):What evidence do we have that this article makes a correct evaluation? I see a lot of claims. No analysis or proof, not even a graph...
Ivan Di Liberti (Jun 15 2025 at 10:38):Also, who is the person behind prof. Axelrod?