AI isn't the cause of the tech hiring slow down! There was a law that went into effect in 2022 that updated Section 174 of the tax code.
Here are two scenarios to illustrate this:
- In 2021, you could found a startup and hire an engineer and pay them $100,000. Say your company did $100,000 in revenue too. In this case, the $100,000 in cost cancels out the $100,000 in revenue, and your business owes zero dollars in taxes. This makes a lot of sense.
- In 2022, you could found a startup and hire an engineer and pay them $100,000. Say your company did $100,000 in revenue too. Instead of being able to deduct the $100k salary in the first year, you have to amortize the $100k salary over 5 years.
So in this case, you'd have a taxable income of $80k for the first year. This means you'll have a $24k tax bill with no money to pay it!
Many companies were caught off guard in 2022 and 2023 during tax season and had to take out loans to pay their tax bills!
So nowadays, when hiring a software engineer companies have to think, "will this hire pay off in 5 years?" and the answer when hiring junior engineers is, "maybe, maybe not."
In the old world, it didn't matter because 100% of the junior engineers salary could be deducted from a businesses taxes!
If you're struggling to get a job in tech, please call your senator and demand that they repeal the update to section 174 of the tax code! This would immediately solve about 50% of the tech hiring slow down we've seen in the last 2 years!
#softwareengineering
Professor Strang gave his last Linear Algebra lecture today after 66 years at MIT.
Strang was among the first to upload his classes to MIT OpenCourseWare when it first came online in the early 2000s. His 18.06 lectures have been viewed millions of times around the world
Congratulations to Bob Metcalfe, who receives 2022 ACM A.M. Turing Award for "the invention, standardization, and commercialization of Ethernet," which has become the dominant way of connecting computers to other devices, to each other & to the Internet: https://t.co/HV3dgCdcTz