A naukri.com initiative
Analyticsindiamag
6d
8
Image Credit: Analyticsindiamag
Did Big Tech Companies in the US Lay Off Thousands to Save Tax?
- In the US, big tech companies like Microsoft, IBM, and others have laid off thousands of employees, citing AI and financial factors as reasons.
- Changes in US tax law, particularly Section 174 of the Internal Revenue Code, have impacted companies' tax burdens.
- Previously, companies could claim full deductions for research and experimentation costs in the same year, but now costs must be spread over multiple years.
- This change led to increased tax bills for companies, resulting in layoffs and financial challenges.
- Salaries of employees involved in R&D were no longer immediately deductible, affecting taxable income.
- The IRS now requires labor costs related to R&D activities to be amortized over certain periods.
- The changes in tax law have led to tech layoffs and increased tax liabilities for companies.
- The issue of tax changes driving layoffs has been a concern in the tech industry, impacting companies' hiring and R&D spending decisions.
- There have been efforts to address the tax law changes, including a bill to suspend requirements related to capitalizing R&D costs domestically.
- Tech community members and Y Combinator alumni have petitioned to restore the previous tax treatment permanently.
Read Full Article
Like
For uninterrupted reading, download the app