The rules of the game have changed. We were allowed to expense all employee compensation tied to software or R&D in the year in which we paid it. Now we can only expense a small fraction of that because we have to capitalize the expense. That means if you paid and developer $100 to develop a piece of software then sold subscriptions totaling $100 you now have a profit. The old model you have zero dollars in profit the new model says you have something like $80 in profit that you know have to pay taxes on… with what cash?

I guess that the government isn’t considering the expense of the employee as much as they are considering the value that the company has retained. Say the developer creates some software that you turn around and license to your customers. That software now has a value, and it will have a value next year too. It probably won’t have a value forever, which is why you can expense a certain percentage of it every year for x number of years.

The money you spent on the employee is probably a direct expense that year, but the product they created still has a value. The simplest way of valuing the product, from the governments perspective, is just to consider it equal to the development cost.

This is how other businesses have always had to treat the work product of their IP generated from R&D...

Software businesses were exploiting a loophole, which was fine when they were limiting themselves to their own turf. When they started encroaching into and destroying other industries, it no longer made sense to keep this loophole in place. So basically, the software industry has only itself to blame for this.

And then theres engineers devoted to maintenance of the systems full-time.

Do ops/infra people fall under this?

I've thought about this for a long time. If we wanted to actually tax this wealth, we should just make people pay capital gains on marked-to-market positions every 10 years. Now before everyone starts shouting "yea, but the valuations aren't value," you could easily tax them on the lowest reasonable marked-to-market nominal value over the last decade, and you'd still get that tax revenue, just a decade later. It's just a way to have a property tax on a very speculative type of property.

I've been a casual investor my entire life, and I still think it's ridiculous that you can just hold an asset forever and never pay a property tax on it, but some guy scraping together a life for his wife and kid has to pay property taxes on his house every year.

I think micro taxation on all transactions (including at ATMs) would work better. Easier to explain, harder to avoid since you tax both sides of each transaction.

The idea that a gain isn't a gain until the asset is sold is nonsense. That'd literally be like saying that Bill Gates or Warren Buffett never made a dime on any of their stock that they are giving the charity. It's a ludicrous conception of capital gains, but it's exactly the one we use.

Which is the point, really, cause nobody cares about the small person who got a 1000% return on 50$ of Bitcoin, we care about massive assets owned by a tiny minority who is able to dodge capital gains tax even if their asset growth is only 4% per year.

A capital gains tax taxes the $2,000,000 unrealized -- but eventually effective -- gain.

A wealth tax taxes the $3,000,000 estimated net worth.

There is a real distinction. A real reason to incentivize productive capital, and that is you get to keep what you've earned. The point I'm trying to make is only that people should pay taxes, and an unrealized capital gain from literally 40 years ago isn't some unknowable investment outcome... it's a capital gain.

When the loan is repaid and AMZN is uncollaterized, treat it as a new buy event with a new cost basis.

Then anyone who wanted material benefit off of their wealth would be required to pay taxes on it, rather than "benefit now, leave the gains to my estate".

At that point, it doesn't matter that they borrowed against their positions because spending the money they borrowed still taxes their stocks indirectly.

It also gives you a better scalpel. Instead of trying to wrangle the different income structures (blends of w2, 1099, stocks, bonds, real estate, etc etc), differentiate via the purchases:

- superyachts: very high tax - luxury cars: high tax - vacation homes: high tax - clothes: low tax - staple groceries: no tax