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Financial services companies often have low margins against their revenues, so the tax disproportionately hits them relative to earnings.
by ummonk 7y ago
Financial services companies often have low margins against their revenues, so the tax disproportionately hits them relative to earnings.
- ian0 7y agoI would have thought the opposite. Margins tend to be high in financial services, revenue tends to be tiny. The value of payments / GTV is huge, but the taxable component is the fees themselves?
- vertoc 7y agoYeah but Stripe doesn’t get to keep most of those fees - it’s mostly interchange which goes to Visa which is then distributed to the issuing bank of the credit card
- ian0 7y agoYeah but you don't book other peoples fees as your own revenue. VISA has a profit margin of 54%. Surely they are not counting the entire interchange cost (of which they receive a v. small percentage) as revenue.
- scarejunba 7y agoAFAIK they count the entire processing fee as revenue. It sort of makes sense. If I were to make a service on top of Twilio and charge you 1% more than Twilio, then I have to count the whole amount you're paying me as revenue and the whole amount I'm paying Twilio as a cost. That's just as logical as if I were to build a value-added service on top of AWS, or if I bought things on Alibaba and then sold them in America.