Comment by twodave

I am not sure I understand how amortizing these expenses benefits the government at all, as it is. I won't speak to the methods the government is using to value software, because others have made those points better than I could.

First, I think the impact on large businesses has diminished greatly since 2022 anyway, so restoring the tax deduction would essentially give those businesses a 1-year "bump" in their deductions (since they'd be able to expense the previous 4 years of left-over deductions all at once, plus the current year in full). As far as I can tell, the expense isn't tied to individual workers, just the combined salary expense. So hiring/firing shouldn't be largely impacted. And, any benefit the government would have gotten from large corporations has (again, since 2022) now expired.

For small businesses and start-ups, there is of course a much greater impact. And, ironically, I think the government is actually collecting less from small businesses in the long term, because the businesses that needed the full deduction to survive can't be collected from, having gone out of business.

So the government isn't collecting any more taxes today than it used to. It is probably collecting less, depending on how much revenue has shifted from small (and now failing) businesses to large ones. And we're basically encouraging all of those more entrepreneurial technologists among us to go work for larger corporations instead of striking out on their own.

I guess my question then, is, who does this tax code even benefit?

Edit: looks like it was just a victim of the TCJA, meant to make TCJA look less expensive. I don't think it had its intended effect.