Comment by happytiger | Hacker News Reader

Comment by happytiger | Hacker News Reader

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Compare the average engineer to ownership and executive compensation and salaries my friend. Just because many engineers make more than average wages doesn’t mean they are compensated like owners and other senior level compensation packages… there is a massive gap.

Just look at the compensation gap between CEOs and software engineers:

https://www.dice.com/career-advice/income-gap-tech-ceos-soft...

I know people on HN like to think of FAANG salaries when they think of software engineers, but the vast majority get nothing close to that. And they are firmly in the “worker” category of salary ranges.

46 of 50 states have regressive taxation policies favoring the rich, and this taxation system is definitely regressive as it’s killing startups and small business’s ability to hire software developers by creating a tax punishment for doing so: a literal regressive tax as it punishes the working classes while favoring the upper classes (its definition).

https://itep.org/whopays-7th-edition/#:~:text=46%20states%20....

Poverty can look like raising a family as a single parent on a software engineering 91k average US salary in a place like NYC (when the CEO of the company you work for makes 30M a year). It’s not always Federal poverty levels that count.

I know it’s easy to dismiss this point of view as political, but that’s not my intention. It’s important that people realize how unequal even software jobs have become.

This is not an income tax. Employees aren’t getting taxed.

This is quite literally a tax on owners, so even by your definition this is the opposite of a regressive tax.

What this tax does do is heavily benefits incumbents over new entrants. It heavily benefits those that are already rolling in profits over those who are about to turn a loss into a profit because where it really hurts is in the margins.

Companies that have been around for a while may suffer for a couple of years as the tax is just introduced, but a few years later they will start reaping the benefits as they get tax credits from the past year.

But companies that are new will suffer at the worst possible time, right when they’re about to prove the viability of their business.

I guess it's how you define regressive. Is the following tax regressive or progressive? top 1%: 5% top 2-50%: 20% bottom 50%: 0%

No, it’s the opposite. The term regressive tax refers to a tax that is applied uniformly regardless of income. Regressive taxes take a larger percentage of income from low-income earners than from middle-and high-income earners.

One of the main purposes of section 174 is to help foster “research or experimental expenditures”. However, the new section 174 rules are actively discouraging and effectively penalizing companies for incurring these costs because of the significant tax increase they may face as a result.

So it’s the employees who are losing their jobs due to the tax, directly. It impacts those who are working for an hourly wage, not the owners. You could argue that the owners have a shoe in the game because they can hire fewer people, which is true, but it’s actually killing software engineering jobs and it’s the penalty to employment that makes it regressive. It’s evenly applied but the effect is uneven. A regressive tax takes a higher proportion of earnings from lower-income households than those with higher incomes… that’s my point.

The top income earners don’t get hit by tax changes killing their positions, so the real threshold is whether someone is getting paid a salary or not. It deeply impacts salaried employees, not owners. Owners just have one fewer employee. That software engineer is out of a job. And it’s happening at scale and having a much larger impact than I think a lot of people realize.

Hope that makes more sense. I’m sorry if I was unclear. It’s been a day my friend… :)

> Regressive taxes take a larger percentage of income from low-income earners than from middle-and high-income earners. I agree with this definition, and I'm pretty sure this tax won't fall on low-income earners. It will fall on a combination of devs and owners. (Probably more owners than devs, I doubt we'll see a large reduction in developer salaries)

I also agree it's really bad tax policy.

But later you seem to switch to definition of whether a tax is regressive by comparing owners vs employees but that seems only tangential to whether or not the tax is regressive, which every definition I've seen has more to do with income level relative to the general population, not the 0.1%.

Beneficial ownership of companies is the primary distinction between owner and employee. When you have taxation that targets companies but impacts rank-and-file employees while essentially benefitting owners and executives is consider regressive by definition.

I don’t know how much inequality needs to be to “qualify” as regressive but it’s not inappropriate to assign it to working class employees vs multimillion dollar salaries and 20-30M dollar comp packages.

A regressive tax is simply a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. Regressive taxes affect people with lower incomes (and everyone has a comparatively low income vs executive and ownership classes these days) more severely than those with higher incomes because they are applied uniformly to all situations, regardless of the taxpayer.

I’m not perfect and I might be misapplying it somehow, but that’s my understanding.

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