Hacker News Reader

Comment by whatever1 | Hacker News Reader

I am all in for allowing tax free bloated RnD departments just with the hope that once in a decade idea will propell the overall economy.

The marvel of modern computing is a result of RnD bloat that was done without immediate impact to the bottomlines of their own companies.

View on HN

Many inventions of the modern age were largely R&D bloat as you'd describe it - in this age R&D is done in university, spun out into a startup, and dies shortly after the IPO - but there's a flicker of it occasionally lasting on if it can hide under the guise of a tax deduction.

That would make sense, if companies and executives paid their damn taxes in the first place.

Tax-free ? This was a regular Google team.

Maybe they meant revenue free?

In the US, R&D expenses can often be deducted when filing taxes. I’m sure large companies like Google would be taking advantage of those rules.

Can't all expenses be deducted when filing taxes? I mean, taxes are paid on profit, which is revenue minus expenses.

Yeah the person you are replying to was imprecise - there's actually tax credits for R&D expense in the US rather than just tax deductions.

https://www.plantemoran.com/explore-our-thinking/insight/202...

Starting this year you need to amortize the R&D expenses over 5+ years, which is going to be brutal for startups.

Losing a lot of money and you can't write off your engineers

Not to mention the thing about tax credits, but when people say "R&D expenses" they often include quite a lot of investments on their definition.

In fact, it's arguable if anything in R&D qualifies as an expense at all.

Only money spent that turns into an asset is investment. I’m not sure how it is in US, but in Germany, for example, not even registering a patent is an investment and does not imply the creation of an asset — only buying the patent creates the asset.

What they meant was that the R&D was fully deductible, not amortized over a number of years. It's like saying that a business's electricity bill is "tax-free" because they can deduct it from their revenues immediately.

And as it is, Google certainly paid property taxes immediately on the office building as well as FICA on all of the employees who, of course, paid their own taxes.

But haters of the R&D system love to call it "tax-free".

There's the benefit of expensing the costs over amortizating them - but there's also straight up cash in the form of R&D tax credits - it's one method tech companies use to minimize their tax bills:

https://www.plantemoran.com/explore-our-thinking/insight/202...

Weren't transistors specifically invented to improve telephone networks?

I mean this is how the US operates. Other countries continually try to refine their existing industries and societal structures. In the US, you let everything rot and hope that a hail Mary innovation comes out of somewhere and creates a breath of fresh air. It creates quite a wild society, but it seems to have worked for now!

Reply on news.ycombinator.com