Thread regarding SAP layoffs

A US Business Tax Law Change That Partially Caused Layoffs (Section 174)

Let’s pretend that you are an innovative, highly-experimental startup, scaleup, or small business. You made $2M in revenue in 2023, you paid $1M in salaries, and you had another $1M in rent, equipment, travel, and many things on the above list. Under old tax law, these are all write-offs for 2023, and you might end up paying no taxes if you end up with no profit or a loss.

Imagine this under the new tax law. You made $2M in revenue, but you can only write off $100,000 (10%) of your $1M in salaries. Maybe you can only write off 10% of your other $1M of expenses.

All of a sudden, you are a company with no real profit and nothing in the bank, but you have $1.8M of taxable revenue. You might owe hundreds of thousands of dollars in taxes. And you might not have the money to cover that.

https://www.linkedin.com/pulse/us-business-tax-law-change-partially-caused-layoffs-174-levitt-mba-mrbbf

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| 1051 views | | 1 reply (March 7, 2024) | Reply
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I disagree with this piece blaming the 2017 tax cut which led to significant cuts on business tax rates and I recall many big companies gave big bonuses after it passed. Blaming a 7 years old law instead of inflation doesnt seem justfied to me at least.

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