
What Programmers Are: Why an Unprofitable Company Can Have 70% Margins - fagnerbrack
https://dev.to/flaque/what-developers-are-why-an-unprofitable-company-can-have-70-margins-4jbg
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cbanek
I think the article missed the actual reason why they aren't considered part
of the COGS (cost of goods sold): taxes.

First off, I'm not a CPA or tax lawyer.

You don't get tax incentives for having more input cost on each item produced.
You can write off the costs against your sales, like how the company doesn't
have to pay taxes on all their sales, but only their profit.

But you do get massive tax benefits, and sometimes even tax credits, for doing
"research and development." And many times, all of software development could
be considered, well, development.

This is why companies tech companies like Google and Amazon pay very little in
taxes. They know how to use these tax systems, and will write off things as
R&D all the time.

[https://www.alliantgroup.com/services/r-d-tax-
credit-2/](https://www.alliantgroup.com/services/r-d-tax-credit-2/)

[https://www.cnbc.com/2019/04/03/why-amazon-paid-no-
federal-i...](https://www.cnbc.com/2019/04/03/why-amazon-paid-no-federal-
income-tax.html)

"Amazon’s low tax bill mainly stemmed from the Republican tax cuts of 2017,
carryforward losses from years when the company was not profitable, tax
credits for massive investments in R&D and stock-based employee compensation."

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BubRoss
Tldr - 'programmers aren't included in the costs'. I don't know if that is
true, but that's the answer to the clickbait.

