Stripe Tax is chugging along. We wrote a brief roadmap of what problems we can solve for users today and which ones we hope to be able to solve soon:…
Some people think that taxes are complex because the people who write or enforce the rules are perverse. I think it’s mostly because a) taxes are used to express society’s preferences and b) society’s preferences are complex.
For example, consider sales/use taxes around food. A key goal of most tax regimes is “progressive taxation”; you generally want to take more as a percentage from “richer” people and less from less well-off people. (Definition of “richer” also complex when you try to encode it.)
It is inherently difficult to do progressive taxation on a consumption tax, because rich people consume far less of their income/wealth than poor people do. But consumption taxes are relatively easy to collect & have relatively high compliance rates, and so governments like them.
And so one patch to a flat consumption tax proposed almost immediately everywhere is “Let’s give a preferential tax treatment to food. It’s a large portion of the basket of relatively poor people and a minuscule portion of the basket of rich people. Plus people need to eat.”
But society has very complex feelings about food! One, for example, is that society very frequently feels there is a moral hierarchy for food. And consumption tax rates often end up tracking this moral hierarchy.
That hierarchy is as complicated as anything medieval theologians every batted about, and somebody has to actually reduce the edge cases to decidability, because a computer needs to ring things up correctly at the end of the day.

Enter the gingerbread man.
The UK’s version of the moral hierarchy puts biscuits with core foodstuffs (like apples) but cakes with decadent luxuries (like… cakes), taxing luxuries but not core foodstuffs.

Enter Shroedinger’s gingerbread man: is he a biscuit or a cake?
Her Majesty’s revenue officers put their pencils together and created a clear ruling on this, which I will except from the above post but which I swear is a thing that you can follow the link to read official sourcing on:
My other favorite example of this is from here in Japan.

Many geeks may be familiar with the Potion from Final Fantasy. You may have missed this, but Square and 7/11 did a promotion where they released a Potion energy drink, in one of two bottles. One looked like a Potion.
In recent years, Japan had a blended consumption tax regime: 8% standard (currently 10%), with a temporary reduction to the previous rate of 5% for favored items including foodstuffs.

Thus the question: is a Potion a beverage?
Having had one myself, I think one needs to have an extremely generous definition of drinkable to call a Potion a beverage, but be that as it may this was the ruling that came down:

A Potion in a plastic energy drink bottle is likely to be drunk, like a Red Bull, and is a drink.
A Potion in a commemorative glass bottle, on the other hand, is a hobby item with the incidental inclusion of a liquid which may possibly be drink, and is taxed at the higher rate.
So, back to online commerce: many software companies also have pain with this, especially with the thousands of different jurisdictions and increasing desire of their polities to capture revenue from The Internet (TM).

My hometown of Chicago instituted a “cloud tax”, for example
Chicago being a large city there are likely a lot of SaaS companies which innocently have customers in Chicago and would happily charge/pay it if that were simple.

It is, unfortunately, not yet simple.
Today, we can do a pretty decent heuristic identification of whether a user is in Chicago and automatically charge the cloud tax for you.

Eventually, we hope to get to the point where we could (on your behalf) automatically register with Chicago and remit/file the taxes for you.
This gets business owners what they want: a simple, predictable, effective way to do the thing society demands of us, without troubling our sleep with dreams of tax avoiding gingerbread men.

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More from @patio11

18 Nov
I feel unreasonably proud as a Chicagoan interested in credit cards that when I got the email about Reserved by Sapphire I said “Chase did Tock? No. Chase must be white labeling Tock.”

(They are.)…
Tock is an amazingly brilliant business by the way, by the sort of restauranteur who also posts on HN for fun.

High end restaurants have an inventory management problem and the relevant inventory is seatings not food. Tock suggests they sell pre-paid reservations like shows do.
This way they don’t have to eat no-shows or parties which reserve a table for 8 but only show up (and pay for) 5.
Read 5 tweets
5 Nov
If you enjoy my writing and enjoy e.g. Money Stuff you would likely enjoy Net Interest, which is @MarcRuby's newsletter on banking topics.

Let me illustrate with a single paragraph why this is obviously the future of e.g. equities research:
Substack has made it incentive compatible for the world's various obsessed experts on various topics to hire themselves out to the Internet rather than hiring themselves out to e.g. financial intermediaries, and then they do the sort of deep work that experts do.
Also: holy me do I not want to be the investment banker who let a math error work its way into an IPO prospectus.
Read 6 tweets
5 Nov
Agree so much. Interesting knock-on effects, too:

1) Companies which previously had a $25k minimum to account for legal friction/founder headaches should be happy to take $1k from e.g. an engineer.

2) It's SO MUCH better for "not my day job" angel investors to centralize info.
e.g. I owe the National Tax Agency (Japanese IRS) some math every year about all of my overseas assets, including those which did nothing in a year, and the process of collecting that information looks something like this:
Non-AngelList investment from 2012: get docs out of Dropbox, grep inbox to see if e.g. this is the one that I remember signing the docs about a corporate transaction this year or not, math math math, en-spreadsheet.

AngelList: download report on all, send to accountant, done.
Read 11 tweets
5 Nov
Bits about Money #3: How credit cards make money.…

Some brief elaborations from the cutting room floor:
The essay talks about cross-subsidization at a few points. One fascinating form of cross-subsidization was that credit cards *changed who ultimately pays for an individual's use of credit.*
This had huge ramifications for small businesses, which are historically (and currently) horrifically capital constrained almost all of the time. They also have extreme difficulty in lining up traditional bank financing.

Credit cards let merchants opt-in to financing customers.
Read 11 tweets
5 Nov
A quirky feeling I've had on our covid-19 response is that some institutions have difficulty doing things which are *clearly* within our capabilities while others are pushing boundaries in their respective fields.

A happy example of the later:…
More effective covid-19 treatments is always good news, of course, but taking a teensy look at the actual specifics of this:

This was identification of a new molecule, synthesization, testing, demonstrating of efficacy, and preparation for scaled manufacturing.

In two years.
My impression is "Humanity very literally did not know it could do that on that timescale. Not for covid. Not for anything."
Read 4 tweets
4 Nov
Isn't this just *obviously* the way the typical consumer's most important transaction should want to work? People are worried if they can make the math work. Me, less so, but that aside: few would say "Sign me up for the traditional sell/buy process!" with this as an option.
Ignoring the "new experience" thing which is product speak for "We stitched everything together in a web app", substantively:

1) You ask Opendoor for a quote.
2) They give you a hard quote and accept sale contingent on you winning target house.
3) You share pre-qual letter.
A "pre-qualification" letter is a document from a mortgage broker or originator that says "Contingent on you submitting a bunch of documentation, indicatively, we think we can underwrite you for a mortgage up to $X." Most common use is showing to seller to say "I could swing it."
Read 12 tweets

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