Comment by thayne
6 months ago
The company already pays payroll taxes on those salaries, and the employees pay income taxes. And the people hurt by this aren't the shareholders or top executives, it's the rank and file workers getting laid off, losing benefits, and being asked to work more for the same pay.
What this change effectively did was make software developers significantly more expensive, without increasing the amount those developers get paid.
The company does not pay payroll taxes. Individuals pay those taxes.
It doesn't actually matter that much who actually writes the check to the government (although in the US, both parties pay taxes).
Either way, the total cost of employment is higher for the employer than the after-tax income of the employee.
It matters alot. Both the employee and employer are benefitting from government spending, the employee shouldnt have to foot the whole bill. That is dytopian
If corporations were able to operate in a high trust fashion and actually take responsinility for their tax burden properly, instead of trying to shirk it, then this policing wouldnt be needed, but we dont live in that world
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For anyone wanting to read more on the topic:
https://wikipedia.org/wiki/Tax_incidence
It’s split but the company pays more. Both pay SS and Medicare. Company also pays unemployment.
Software developers are already too expensive in US, so this applies some downward pressure on those salaries. Frankly the economy will be much better off when tech salaries equalize across geos, thus avoiding the deep whole US manufacturing is in (for example, manufacturing wages in Vietname are one tenth of US manufacturing wages, and thus it is better to open new plants there).
If you want equalized poverty, feel free to move to the EU. Say goodbye to owning a nice house, or building any kind of wealth - that's reserved for the old money class.
In the US, software is one of the few remaining ways to achieve the American dream. I came to this country to work hard and earn money.
Weird, I live in the USA make $180k yet still can’t own a house and building wealth is extremely hard.
EU has better societal benefits than the US (access to healthcare, education, mandated vacation time (often starting at 3-4 weeks).
The vast majority of people care about living a life without suffering. In the US this is only reserved for the rich it seems.
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I don't think we share the same definition of poverty.
I'm in the EU. You have no idea what you're talking about.
Yeah, make everybody equally poor. That'll solve things.
If you look at happiness and indexes versus taxation rates - yes, making everybody poorer does tend to solve things. Not too soon in the growth curve - but certainly not never.
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Don’t forget the other stakeholder - the general public.
Yes it sucks for developers, but does it make any difference for any other employee? Why does Joe’s plumbing have to pay those taxes, but Jane’s AdTech company doesn’t?
Sure, there are benefits to investing in R&D in general, and tech has fueled a lot of growth, so incentivizing it has likely paid off for the whole economy. But will that forever be true? Maybe?
If Joe's plumbing hires an assistant plumber, they get to fully deduct the assistant's salary.
Why do I, the hardworking tax payer, have to subsidize Joe Plumber, who already has a big house with a pool?
In some parts of the world we have a sales tax which is a form of minimum tax on business outputs. The consumers of plumbing and software pay 10% regardless on a businesses profitability.
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Joe's plumbing doesn't have to pay those taxes. Operational costs, including paying employees for normal operations, is deductable.
But with the change, the cost of R&D employees is now only partially deductible (right now, you can eventually deduct the full amount over the course of several years), and software development has to be considered R&D.