THE HIDDEN TIME BOMB IN THE TAX CODE THAT'S FUELING MASS TECH LAYOFFS

Summary from the TLDR newsletter

Section 174 of the IRS Code of 1954 guaranteed that US companies could deduct 100% of the qualified research and development spending in the year they incurred the costs. This incentivized companies to develop their products in the US and fueled the rise of smartphones, cloud computing, and mobile apps. The Tax Cuts and Jobs Act passed during President Donald Trump's first term slashed the corporate tax rate from 35% to 21%, but it also added a future provision that meant that companies must spread the research and development deduction in smaller chunks over five or even 15-year periods. The provision went into effect in 2022, making companies' biggest source of expenses now a painful tax bill, which fueled mass layoffs.