You know not what you speak of. I am small developer without funding.
For every developer I hire I pay tax on 90% of their wages in year 1.
So, if I hire a 200k a year developer, I have an increased tax liability of 180k. That works out to paying about $75k ~ $85k. So my 200k developer becomes an 285k developer.
Now, eventually I could regain that cost, or I could do like I know of a few companies and commit tax fraud by not correctly reporting my expenses.
BTW even as a partner I am hit by this - to correctly file my taxes I have to report my retirement savings as development revenue and pay tax on what is supposed to be tax free.
Untrue: for example, if you are a lawyer employed to help a company acquire real-estate or another company (i.e., a merger) then your salary is treated the same way by the US tax code (i.e., your employer must amortize your salary).
If you want to argue against the current tax code, point out that currently companies do not have to amortize the pay of executives even though arguably their work fortifies the company's ability to make a profit in future years like the work of software developers does.
A recruiter, or an HR person in general, do work that “fortifies the company’s ability to make a profit in future years” as you say, by hiring people that will hopefully work there for years.
Same as a financial analyst implementing new processes and spreadsheets to better control money spending.
One can argue that most white collar worker is investing in future profit. Sales people nurturing long sales cycles, lobbyists, content marketing, SEO.
Why are software developers (and merge lawyers) snowflakes among all those types?
If a recruiter or HR worker helps a company hire 100 new employees, all 100 are free to quit at the end of the year whereas the artifacts created or improved by a developer will be the property of the company forever.
In other words, maybe it is a bad idea to treat people (employees in this case) like property even in our tax code? (I'm personally OK with software's being treated like property.)
The ‘smothering’ you speak of is taxing the retention of earnings for capital assets. If you think this smothers software development, you should look into how much capital assets cost in other industries.
Personally, I think we should either eliminate the corporate income tax (and increase capital gains taxes correspondingly), or allow for all capital spending to be written off fully on day one. Your position of treating capital spending on software differently makes no sense to me.
For every developer I hire I pay tax on 90% of their wages in year 1.
So, if I hire a 200k a year developer, I have an increased tax liability of 180k. That works out to paying about $75k ~ $85k. So my 200k developer becomes an 285k developer.
Now, eventually I could regain that cost, or I could do like I know of a few companies and commit tax fraud by not correctly reporting my expenses.
BTW even as a partner I am hit by this - to correctly file my taxes I have to report my retirement savings as development revenue and pay tax on what is supposed to be tax free.
Pretty cool.