There's a Fascinating Hidden Reason That So Many High-Earning Tech Workers Are Getting Laid Off Now [View all]

Why didn't we know about this before?
Jun 7, 7:30 AM EDT

by
Noor Al-Sibai

A little-known change to the tax code during Donald Trump's first presidency just might be the driving factor behind all those tech layoffs over the past few years.

As Quartz reports, a 2017 change to a 70-year-old tax law governing business spending didn't go into effect until 2022 — and three years after it finally did, we can see how harmful the move was.

Back in 1954, the Internal Revenue Service enacted Section 174, a rule that let companies deduct 100 percent of their research and development (R&D) spending, including salaries for the people involved in it. As Quartz notes, companies like Microsoft and Apple were built upon a tax system that rewarded R&D by allowing all such expenditures to count as write-offs — a system that Trump quietly dismantled at the start of his first stint in the White House.

The president's Tax Cuts and Jobs Act (TCJA) of 2017 was perhaps most infamous for slashing corporate taxes from 35 percent to 21. To offset the money lost from those massive cuts and comply with the Senate's budget rules, Congressional Republicans quietly added various rate hikes to the bill that wouldn't kick in until later, and nixing Section 174's 100 percent R&D write-off was one such tactic.

https://futurism.com/hidden-tech-layoffs-reason