A change made by President Donald Trump in the tax code three years after it took effect is believed to be the main reason behind the recent surge in tech layoffs. In 2017, the TCJA lowered corporate taxes from 35% to 21%, but also included a rule that companies had to amortize research and development (R&D) deductions over five to 15 years instead of writing them off entirely.
This change affected tech companies like Microsoft and Apple, which previously wrote off all R&D expenses as tax write-offs. The shift meant that they had to pay salaries for developers upfront, rather than deducting the costs at once. Since 2022, more than 500,000 tech workers have lost their jobs.
The rule change was not widely publicized at the time, but lawmakers are now launching a bill to reverse it. The American Innovation and R&D Competitiveness Act aims to bring back the previous tax write-off system for R&D expenses before the end of the year. However, it’s too late to help those who lost their jobs due to the rule change or its impact on the AI pivot.
Source: https://futurism.com/hidden-tech-layoffs-reason