I don't understand why this article is written as though amortization of R&D spending's costs is the same as completely eliminating their tax benefit. It seems that this essentially causes a large spike in tax revenue in year 0, which will revert to the mean in years 5-15. Companies now amortizing R&D essentially just have to build up those years of R&D spending backlog. Once they have reached their amortization threshold, they're essentially receiving the same tax break they had before.
In the stable state, both situations (immediate writeoff vs. amortization) would indeed be identical (assuming constant salary expenses over time).
The problem is that, when switching from the immediate writeoff regime to the amortization regime, you do not have a backlog of past-year expenses that are in the process of being amortized, so there is a sudden jump from being able to write off 100% of relevant expenses to only 20% of them.
Given that shareholders are notoriously interested in short-term profits, hitting profit targets requires either expanding revenue or slashing expenses.
Yeah, and that cliff is why they put this change into the 2017 tax reform. It'll goose federal tax revenue for 5 years in the back half of the CBO's 10-year projections to make the changes appear revenue neutral overall. In any case, the impact started in 2022 and it's now 2025. We're already over halfway to steady-state.
Right?