Massive Tech Layoffs May Be the Fault of a 2017 Trump Tax Cut

The good times of Silicon Valley are finished – at least with regard to the current generation of coders. THE The software industry is shrinking And, since 2023, the technological industry has been hemorrhage at an amazing rate. Workers who would have been safe several years ago are now on their asses. Although the reasons for this are diverse (AI is often discussed as A potential culprit And the global economy has experienced its ups and downs in recent years), a potential engine could also be the tax reductions that Trump went in 2017.

It turns out that a little -known provision of the law on tax reductions and 2017 jobs (TCJA) has changed a long -standing escape, known as article 174, which enabled the technological industry to unload the cost of its research and development operations on the federal government. Before the TCJA, technological companies could deduct 100% of R&D costs, allowing technological companies to commit significant resources to innovation. Bloomberg reports This, while the congress sought to find a way to compensate for the cost of the allocation of large tax reductions to billionaires, a place where they discovered the fat at the cut was the financing of the R&D of the technological industry.

The 2017 bill moved to the deduction of a complete cancellation of funding which should be analyzed over a period of several years. The provision that the financing did not start before 2022. Shortly after its entry into force, the technology industry began to allow jobs like person.

Indeed, 2023 and 2024 were historically bad years For the technology industry, with large companies like Meta, Amazon and Google Booting Workers by the thousands. Quartz has more closely examined the links between this change in policy and the problems of the technological industry and speculates now that There is a positive correlation:

… The delayed change for a tax provision of several decades – buried deeply in the 2017 tax law – has contributed to the loss of hundreds of thousands of high -end white collar jobs. It is the image that emerges from an examination of corporate deposits, public financial data, the analysis of deadlines and interviews with initiates of the industry. An accountant, working internally in a technological company, described it as a “niche problem with a broad impact”, echoing the feelings of investors in venture capital also interviewed for this article. Some have spoken on condition of anonymity to discuss sensitive political issues.

Quartz also notes that the change in policy would have translated as a loss of income for various positions:

The tax advantages of wages for engineers, product and project managers, data scientists and even certain members of the user and marketing staff – who had all reduced a taxable income in the first year – were now to be distributed over five or 15 years.

The reality of the Government of the Government of Silicon Valley is particularly ironic given the Rabid anti-government feeling Currently circulating in industry. People like Marc Andreessen Would you like to believe The R&D of this technology can be funded by a single private money, despite no history of good reputation for this. Doge d’Elon Musk, in the meantime, Recently attacked The very parts of the government who have been responsible for helping businesses like his (Tesla) will flourish. This is another sign that the American billionaires are so stained by the greed that they are ready to shoot a gift horse in their mouths and call it victory.

However, everyone in the technology industry is not an idiot. There is currently a concerted effort to restore the government’s R&D grant. THE US action innovation and R&D Competitivitywhich was introduced by a bipartite coalition of the legislators, would restore the total flow of federal dollars for the needs of technology development. Last month, representatives of large technological companies would have reported At the Trump administration, they could withdraw previous promises from the American investment if the full tax grant was not coming back.