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PayPal is closing the SF office because the new tax regime makes their business model nonfunctional (as it does to all payments businesses). The tax would be ef
by gamblor956 4y ago
PayPal is closing the SF office because the new tax regime makes their business model nonfunctional (as it does to all payments businesses). The tax would be effectively based on payment volume, rather than profit, and so more than their entire margin would burn up in taxes
That is not how the tax works. It taxes gross receipts, in this case meaning Paypal's fees, not its total payment volume processed, because it only applies to amounts that would be considered income to Paypal for federal income tax purposes. Furthermore, the tax is allocated based on payroll, meaning that the tax is prorated based on the % of employees based in the city of SF vs elsewhere.
Paypal reported net income (i.e., profits) of almost $4 billion last year on roughly $25 billion of revenue on roughly $1.250 trillion of payment volume. Only approximately 550 of their 26,500 employees were located in the SF office, meaning that their effective GRT rate would have been .016%, for a tax of roughly $4m, or approximately their costs for 10 employees. They can afford the gross receipts tax.
- TedDoesntTalk 4y agoI’m not sure I agree with your numbers, but even if they are correct, the tax punishes them for growth: growing their workforce or growing revenues.
- danamit 4y agoWell, looking at the numbers it does not seem to be that big of a punishment. By anyway, punishing growth should be valid, IT workers are doing well, the homeless that are to be helped is not like they gonna be hired as software devs at PayPal. Taxes are nothing but a reallocation of resources and it always has been, and it is the price you pay for living in a society, and it is worth it, you'd rather have the addicted and mentally ill outside of streets one day you might get stabbed by one of them. Also it is not just about taxes, the gov need to take some drastic measures too.
- TedDoesntTalk 4y ago> Taxes are nothing but a reallocation of resources Only when they are used to pay for social programs. Not when they are used to pay things like infrastructure, defense, etc.
- danamit 4y agoInfrastructure and defense are resources, it is something everyone benefits from.
- codefreeordie 4y agoWhere I live has both way lower taxes than SF and also way fewer mentally ill homeless people outside on the streets that might stab me, so I have to figure that this isn't really working out.
- danamit 4y agoHomeless people move from other states to California because it is easier to live as a homeless in the Cali weather. So that's just fortunate for you. California has to solve its problems, it is the hand that it was dealt to them and they have to make the best out of it. If it is not suitable for you to live there, it is fine.
- dnissley 4y agoAccording to the webpage for the gross receipts tax [1], "Gross receipts include but is not limited to all amounts that constitute gross income for federal income tax purposes." Looks like PayPal's gross income was around 3x their net income for 2021: 12.1 billion [2] 1: https://sftreasurer.org/business/taxes-fees/gross-receipts-tax-gr https://sftreasurer.org/business/taxes-fees/gross-receipts-t... 2: https://www.wsj.com/market-data/quotes/PYPL/financials/annual/income-statement https://www.wsj.com/market-data/quotes/PYPL/financials/annua...
- gamblor956 4y agoPayPals taxable income was $25 billion, so I went with the higher number (25 billion vs 12 billion) to establish an upper bound. For a more salient point of comparison, PayPal is complaining about paying $0.01 for every $100 of revenue.
- prepend 4y agoI guess they don’t get enough value from the city to choose to stay. They aren’t “complaining” they are moving to a place with more advantageous taxes. Seems rational.
- onetokeoverthe 4y ago