Yes, I think there are two similar but subtly different flaws in that always.
1) Accounting rules are to match revenue with the expenses responsible for them, which I think is a good principle. If your workers make something now that provides revenue for 5 years, it makes sense to spread that expense over 5 years too. In many cases, you would want to do that as a business, makes it more clear how your business is profitable vs not.
2) Decisions whether to "build vs buy" a capital asset should not have massive tax implications. If I buy CoolSoftwareProduct from someone and resell it for the next 5 years, I'd have to amortize that. Should be similar if I hire a coder to write CoolSoftwareProduct instead.
(This doesn't mean that "salaries should always be amortized" is the right answer, of course, I think it's a very silly law)
I would say, yes there is a flaw there, because salaries are often a huge chunk of R&D expenses, and for the sake of long term growth, we want to disproportionately incentivize R&D spending
How about the salaries of employees being paid to create a new line of business? Say, the business runs restaurants and you decide to break into the tax software business. Can you avoid taxes on restaurant profits right now in order to build your new unrelated venture. ISFICR, tax law allowed outright deducting of costs of the current business, but not costs for starting a new one. Not deducting the new costs against the old profits.
After that, we can nitpick: should the development costs of new software be encouraged the same as maintenance costs of existing software. If you want to encourage startups, then yes they should. If you want to discourage startups or very temporarily increase tax collection, then no.
Discouraging starting new businesses would be unconstitutional. All freedom in the US is derived from being able to participate in controlling capital.
