You're bringing up the question of "what is a fair tax rate," which is reasonable.
The questions of this legislation, though, are different:
Should we incentivize companies to hire corporate executives instead of engineers?
Should we favor trillion dollar companies over startups? (It is much cheaper for Amazon to loan money to the government than three people starting a new venture from scratch, so this favors concentration.)
If you agree that we should discourage hiring engineers in favor of management, that concentration is good, and that low corporate tax rates are good, then this legislation is perfect.
I say that it's good if you believe in low corporate tax rates because this legislation was passed to pay for overall corporate tax cuts, which primarily benefits the largest companies. Amazon actually pays $11.3 billion in income taxes a year (not zero), so on net, even though they have a lot of software engineers, they benefit from this legislation, because they effectively traded having to float money to the government in exchange for lower tax rates.
Big companies care about tax rates more than liquidity, because their borrowing rates are cheap, whereas small companies care more about liquidity (they effectively cannot borrow, or it is very expensive) and their profits are low. So this effectively subsidizes big companies at the cost of small companies.
I think ultimately your interpretation is correct in your last paragraph, but I do wish someone in government would explain what they were trying to incentivize with the change.
Maybe they felt like software companies were too heavily incentivized by the tax code to invest in unproven, unsustainable businesses and would structure their businesses in a way that meant they’d never end up paying taxes.
Startups would blow a bunch of money on R&D for unprofitable moonshot ideas for a few years then the company would fail most of the time, with the government missing out tax revenue where workers could have been allocated to more profitable ventures.
Still, I think that the more cynical take is more likely (big companies lobbying to make it more difficult for small companies to disrupt their businesses)
> I do wish someone in government would explain what they were trying to incentivize with the change.
They were cutting taxes for the very richest people in the US and paying for it in ways like this.