OBBB signed: Reinstates immediate expensing for U.S.-based R&D

The largest competitor to US renewables, would be China. They have been rolling back their subsidies for years. [1]

China, India, Russia, Turkey, Japan, South Korea, and Indonesia (off the top of my head, and a quick google to add a few I missed [2]) have all increased investments into coal since 2020.

The renewable industry in the US was wrought with companies seizing as many renewable credits and subsidies as they can, while providing as little as possible to show for them. If this moves the industry as a whole to focus on projects that are not just marginal at best, we should start to see better traction on projects that actually matter.

We have long been told that renewables are cheaper in every way that matters, so let's see the economics of that play out.

[1] https://www.reuters.com/business/energy/china-roll-back-clea...

[2] https://ember-energy.org/latest-updates/wind-and-solar-repla...

Any green energy project that isn't nuclear is a waste of money and resources. Nuclear is now being pursued in earnest by the tech industry itself. There's no problem here.

What evidence is there of governments being more successful at picking winners than the market?

Governments should stay out of the winner-picking business, which they do with money from the public purse, and allow individuals and enterprise to use their own money to have a go at picking winners themselves.

If industry and banks find investment in any particular field unpalatable without Government incentive, then those investments were unpalatable to start with.

Industry and banks will find something better to do with their money.

Yeah. This is a tough one. Its a really bad bill that happens to also be the best thing that could happen in the economic life of most any programmer.

This is going to make a lot of people's lives a lot worse and I'm against it even though it's an absurd windfall for me and people like me.

The relief was provided to a crisis created by the TJCA in 2017 in the first place. They set they sunset clause that demolished the industry in the past 2 years.

GOP and their blind supporters are just crooks.

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I disagree, every rider was independently lobbied for and the outcome would be the same if passed separately by Congress or as a rider in a larger bill like it was.

There is no reason to have cognitive dissonance over it.

It’s an overstuffed bill because nobody will compromise on anything so the only way to pass a bill that has anything even remotely controversial to either party is one reconciliation bill a year.

This. TCJA removed it and OBBBA restored it. What am I missing here

Twisting not required. Depreciation straightforwardly applies to every other business capital expenditure. Hire someone to put a new roof on a rental property, and you're out the tens of thousands of dollars cash while only getting an immediate deduction for one thirtieth of the value. If you were expecting to pay that cash out of income, it's effectively a realized income and then reinvestment.

The recent (-ly undone) change went against decades of how things were, was crippling for medium size cashflow-positive startups, effectively increased taxes, etc. But it was really just a straightforward application of the general principles that apply to most everything else.

Hiring software engineers is going to become less expensive. So likely there's going to be more jobs on the market, and maybe better jobs.

But when a forest is cut, usually a new forest that grows on that place looks different.

Reversion to the mean

Of course not.

I doubt it, the narrative is that software engineering is dead and everything will be replaced by AI, so that salaries can continue to be depressed. Just like the original passing didn't really cause much trouble in the general market this repeal will mostly just produce more shareholder value.

Might even ameliorate some of the corporate RTO efforts and now s/w devs will have more employment choice and a presumably more vibrant job market.

Are you being serious or sarcastic? I cant tell.

Seriously, that seems unlikely.

Changes like this may have an impact on employment but it’s impossible to observe the results in a vacuum.

Given that most large companies are towing the “AI means less jobs required” line, it seems likely that this will, at best, modestly slow the rate at which companies divest themselves of software developers.

I cant see any reasonable reason, in a broader context, this would have a meaningful impact.

(Yeah yeah, AI means more jobs one day maybe, but right now that is categorically not true, and the future is always pure speculation, but in the near term, the impact of this seems like it probably wont be material to me; maybe a small reduction in the number of layoffs)

At best it will undo some of the decline over the past 2-3 years.

This "solution" is to a problem the GOP created themselves during Trump's first term, when they made the R&D deduction stuff expire in 2022.

I’m hoping so, too, along with another boost in salary growth since they’re immediately expensable.

Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap).

But offshore wages are often 50–70 % below U.S. rates:

• Even after the slower amortization drag, hiring at half the cost nets you ~30 % total savings on R&D headcount.

• On a pure cash basis you only need ~20 % lower wages to break even; most offshore markets easily exceed that.

• So the labor-cost arbitrage far outweighs the tax timing penalty unless your foreign salaries are less than ~20 % below U.S. levels.

In short: the 15-year amort rule hurts your tax deduction, but 50 %+ lower offshore wages more than make up for it.

Awesome, this literally could not be better for American tech workers.

At a previous employer, they used to have this process where they would classify each project as being in active development or being in maintenance, and even the tiniest bit of development work required the "initiation" of a "project" with budget planning and approvals.

At the time I dismissed it as a bureaucratic process invented by the company; after all, they had no dearth of leaders adding bureaucracy to systems for the purpose of empire-building and, to a lesser extent, asserting self-importance. However, upon reading about Section 174, it made some sense, and I wonder whether they might just get around to removing these processes.