Exactly. The issue isn't whether capitalizing salaries is "humane" or "inhumane," as some comments suggest. It's about matching expenses to their corresponding revenue. When you develop software that contributes to revenue over a period, those expenses should be spread out. Capitalized items are simply deferred expenses. For example, when you construct a building, construction workers' salaries are capitalized and added to the building's book value, which is then depreciated over time.
The idea that this is leading to mass developer layoffs is an overstatement.
The total amount spent will ultimately be expensed, whether immediately or over five years. The sole impact is on the time value of money, which I don't believe warrants the current scale of developer dismissals.
Also, the claim that taxes are levied even during a deficit seems incorrect. While I'm not familiar with US tax law, it's typically possible to carry forward losses.
For example, if a developer is hired for five years at $100 annually, the expensed amount in the fifth year would still be $100, even after any legal changes.
It means you need more money early, to pay taxes on theoretical future profits. That means it costs more. That means you can afford less on the same money. That means that you need to lay off people to maintain the same costs.
