But in that case, once the fermentation system is built, the brewery no longer needs that employee.
A better analogy is a brewery hires someone who builds a fermentation system, then continues to operate, maintain, repair, and improve the system over time. Some of the employee's time is spent on work that could probably considered R&D, some of it is on work that is clearly operation, and some isn't clearly one or the other. So how do you determine how much of the worker's salary is R&D vs operational expense? You can try and estimate some percentage, but that breakdown is at best an educated guess, and having to try and figure that out just adds pointless friction.
But that still isn't a great analogy, because in that case the fermentation system isn't the product, the beer is. So for a company that sells software, it would be more like if it wasn't a company that sold brew, but a company that rented out or sold its brewing equipment to other companies that made beer.
Also, the same argument about creating value that pays off over time could be said about most employees. An accountant could find a more efficient way to keep the books that pays off over years; the CEO could create a strategy that pays off over years; customer service staff could create a reputation for high quality customer service that pays off over years; etc.
And then, even if you assume that an engineer's salary is entirely R&D, then the only reason I can see to want that salary taxed at a higher rate is if you want to disincentivize R&D. R&D is already a large expense now in the hopes of a payoff later, and by increasing the tax burden now, you are making that upfront cost even higher.
How about actors? They produce a thing (content) that is sold for a prolonged period of time. Copyright is what, 20 years?
How would Disney feel if the salary paid to the cast of the Avengers was no longer an expense in that year, but amortized over the entire copyright period of the film.
That’s how it used to be until a special rule was introduced allowing only $15m (or maybe $20m) to be expensed instead of capitalized.
Doesn’t change much for the Avengers films which have production costs around $500m. Disney still has to capitalize 97% of the cost. $15m doesn’t cover a single star’s salary.
How does a chef get categorized? They develop recipes which have future value but also do a lot of ephemeral work product.
I think the issue is this fantasy that a software develop only produces long term IP. Or how is it different from an executive who is developing strategy and market positions that have future value?
Maybe it would make sense if we could distinguish such work products as a fraction of their total output, tracked as actual inventory that accountants have to assign value and track capital gains on?
I think the fantasy is that software is mostly like inventing the transistor. Most software is CRUD apps that are more akin to a company’s profit-generating physical infrastructure.
Repair and maintenance costs can be either operational expenses or capital expenses: https://www.nashadvisory.com.au/resource-centre/repairs-and-...
For example, if you pay for someone to maintain the brewery plant to keep it working in its current condition, that’s an operational expense that could immediately be deducted. But if the work is on upgrades and improvements, that’s ordinarily would be a capital expense that must be capitalized and depreciated. A bookkeeping strategy isn’t.
Your other examples are off the mark, because the question is whether the investment produces an income-producing asset. Software generally is such an asset. The question of what’s an operational expense versus what’s a capital expense isn’t always clear cut, and is the kind of thing where accountants and tax lawyers have to make judgment calls.
Both cases are tax-deductible, what matters is not whether it's operational or capital, because for example building up inventory would make an operational expense a capital expense, but whether you then sell or rent/lease/use yourself/... what's maintained or repaired (then it's COGS) or you use it yourself (then it needs to be amortized)
The tax code has been optimized by the rich over the past century to extract profits out of industrial firms and that's where the difference comes from. $100 used to, say, produce a car or a cake that you then sell is immediately and fully deductible from tax because otherwise industrial companies just outright can't survive. Hell, you get to claim back/not pay any VAT and/or sales tax you paid for anything related to them. One way to see it is that these rules are designed to get money to the (existing, "old-money") rich, so when investors don't get money, the government doesn't get money.
If it's equipment for the company to use itself, then it has to be amortized, or more to the point, it means industrial companies can't do what Amazon did: use 100% of their free tax flow to grow "tax-free*" instead having to give that money to the government and investors (15-35% to government 65-85% to the rich, sorry, investors), so they can use it for their own ends.
I'm not judging one to be good or bad, just attempting to frame this correctly. I should perhaps point out, as a last point, that this is a massive difference between the US and European countries. In Europe, investors and governments try to have their cake and eat it too: there's tax due (amortization rules, or worse) on new company creation, on company growth, except of course, for the companies of the rich: you can grow financial capital in companies without paying a cent, money, shares, obligations, ..., just nothing else. That's yet another connection to the rich, to investors. New employees, new buildings, ... are double taxed, only money isn't. In Europe, there have only ever been exceptional cases where it was otherwise. In the US "tax-free" new company creation has been the norm for all of history except since Trump changed this rule.
* between quotes because they still have to pay income tax on any wages, sales tax on any purchases, ... it is very far from tax-free, but such companies wouldn't pay a dime to investors. If they did that would make it very hard to create new companies (which is what this regulation does). Amazon's great accomplishment is not AWS or anything like that but 2 financial accomplishments: first, avoid sales tax, second, avoid paying anything to investors. Whatever business Amazon is in is nothing but a tool for that financial engineering.