California proposes taxes on commercial space companies


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We’re here to help you! The Franchise Tax Board of California has proposed new regulations that would allow the state to tax commercial launch companies.

You can read the full proposal here [pdf].

The rules are designed to apply to any company operating in California that generates at least half the money it takes in from “space transportation” — defined as the movement of people or property 62 miles above the surface of the Earth. That’s the internationally recognized line that separates our planet from the rest of space. It would apply to companies that use California as a launchpad, not California companies launching from other states, like Texas or Florida.

Essentially, they will tax any launch from Vandenberg, basing the tax on the distance the payload flies while still attached to the rocket and still the responsibility of the launch provider.

This is essentially a tax on SpaceX, since they are California’s only major launch company. This is also a tax on Vandenberg, the only spaceport in the state. The result? Expect future companies to flee California. Expect new spaceports to spring up elsewhere. As noted in the article:

At least one company has already been lured away from California for the promise of greater financial incentives — though of a more earthly variety. Moon Express, a company working to mine the moon for natural resources, moved from Mountain View to Florida. In an email, the company’s CEO and founder, Bob Richards, said the company “relocated from California to Florida in part due to the State of Florida’s progressive economic development incentives designed to attract commercial space companies

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8 comments

  • Tom Billings

    Very possibly a response to Elon Musk being a member of Trump’s board of high tech advisors. Elon is no longer a member of the proper club. This may well be what the 1960s Speaker of the House in the California legislature, “Big Daddy” Jesse Unruh, talked about as a “Milker Bill”. It is designed to be negotiated away, or into irrelevance, with lots of cash donations to the Democratic Party of California as a “natural byproduct” of the negotiations. It is what California politics runs on, to a large extent.

  • PeterF

    Puerto Rico, Saint Croix, Saint Thomas, Saint John are all US territories. They are all further south than anywhere in California, Texas, or Florida. They all have unobstructed ocean down-range (some are better than others) They would all welcome the influx of highly paid technical staff and probably could have stupid California taxes negotiated away for 99 years. I would certainly go to any of those places to watch a space launch and stay a week spending money every day.

  • LocalFluff

    Ayn Rand got it spot on 60 years ago.
    Politicians:
    “Mr. Reardon will come and fix this for us with his special metal. He will. “
    No he won’t. Not this time.

  • PeterF

    Saint Croix even has the old Hovensa refinery the south coast with a deep water dock. It was actually the newest refinery in the US. It was built to handle the heavy crude from Venezuela. They had a spill of about a million barrels of oil, they mitigated it by drilling a well on refinery property, sucking it up, and refining it right there. Depending on the progress of the cleanup and if they could get the EPA to sign off, I would assume they could purchase the property at bargain rates.

  • Edward

    An alternate solution, start or acquire business that does not transport men or materiel in space that does more than twice the business than the space operations do. It merely gets around the letter of the law, not the spirit of the greedy politicians. Meanwhile, California (e.g. polar) launches will cost more than launches in other states.

    The problem with a government setting taxes based upon business is that it tends to drive that business into behaviors that reduce the tax, even if the business moves to another location. When the business leaves, the government loses the taxes that were generated from secondary sources, such as the employees and the businesses that the employees would have supported. It is the economic considerations that change people’s behavior that causes the Laffer Curve to be more correct than the government-assumed straight line curve.

    From the proposal’s definition #3: “‘Launch’ means to move or attempt to move people or property from Earth to space. For purposes of this regulation, ‘launch’ also includes the movement or attempted movement of people or property from space to Earth.” This includes landings and splashdowns.

    Is it any wonder that every company that wants to do space tourism has rejected performing tourist operations at the Mojave Spaceport in California? What a loss of business and fame that California and the town of Mojave (as well as Mountain View) could have had. California and especially the Los Angeles region were once America’s premier aerospace areas, but this seems to be waning rapidly.

  • Tom Billings

    PeterF said:

    “Puerto Rico, Saint Croix, Saint Thomas, Saint John are all US territories. ”

    My favorite among them has been Puerto Rico’s Roosevelt Roads, at the Eastern End of the island, with the Naval Station’s old runway now little used as a civilian airport, and the Roads could easily allow ships to deliver all needed supplies to the larghe unused docks.

    However, they all have the same deficit. They are run by Democratic Party legislatures, just like California. In fact, Puerto Rico, the best placed of them, is bankrupt in all but declared status. The banks have stopped lending.

  • wayne

    The bailout money for Puerto Rico magically appeared in the “budget,” which Trump, Priebus, Ryan, and Mitch all love unconditionally.

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