Discussion of this article and the article itself are mixing issues: 1) differing taxes in SF between tech and banks. This is a difference of a few basis point

Discussion of this article and the article itself are mixing issues: 1) differing taxes in SF between tech and banks. This is a difference of a few basis points in taxes. Square doesn't want to be taxed as a bank here. This will cost them a few tens of millions. 2) A new gross receipts tax which disproportionately impacts Square and Stripe [1]. It's more than a matter of "low margins" in this business, it's the very core of how revenue works[2] for Square/Stripe. Those companies take their 2.9% + $0.30 per transaction (https://stripe.com/pricing https://stripe.com/pricing) and call that revenue. Most of that flows _immediately_ back to Visa/MC/Amex/Discover and the card issuing banks. Treating all of that that as revenue for taxation purposes puts Stripe/Square in a very challenging position. A more "fair" approach would be to tax the portion of their fees that they kept before any other expenses. As Yonran points out, this whole relatively unfair situation is one of many many unfair symptoms of CA tax law. As a young person who doesn't own property but earns a relatively high income in California, I am a provider of massive and permanent subsidies to people lucky enough to have bought property before Prop 13 was passed in 1978. The real issue here is Prop 13. Libertarians love to argue that people vote to give themselves subsidies. Mostly I hate this argument, because of course people vote to give themselves services from governments they want. What I find abhorrent is that a group of Californians receive different treatment from the government based solely on when they bought their property. It's time to end prop 13. This article is just one tiny example of where bad policy has bad results. [1]Disclosure: former Stripe employee[3] [2]This simplifies things quite a bit, but the distinctions underneath don't super matter. [3]You can tell by the use of footnotes in plaintext