Cruz’s pork/budget bill also adds new taxes to rocket launches
Ted Cruz, a typical “tax-and-spend” Republican
It appears the Senate appropriations bill that was put forth last week by senator Ted Cruz (R-Texas), head of the Senate’s commerce committee, was not simply filled with pork, it also establishes a new tax structure for rocket launches, with the money supposedly allocated to pay for the increased red tape required by the FAA.
Cruz’s section of the Senate reconciliation bill calls for the FAA to charge commercial space companies per pound of payload mass, beginning with 25 cents per pound in 2026 and increasing to $1.50 per pound in 2033. Subsequent fee rates would change based on inflation. The overall fee per launch or entry would be capped at $30,000 in 2026, increasing to $200,000 in 2033, and then adjusted to keep pace with inflation.
You can read the bill here [pdf].
In a statement by Cruz during a senate hearing last week, he justified these new taxes as follows:
Cruz said the rising number of space launches will “add considerable strain to the airspace system” in the United States. Airlines and their passengers pay FAA-mandated fees for each flight segment, and private owners pay the FAA a fee to register their aircraft. The FAA also charges overflight fees to aircraft traveling through US airspace, even if they don’t take off or land in the United States.
“Nearly every user of the National Airspace System pays something back into the system to help cover their operational costs, yet under current law, space launch companies do not, and there is no mechanism for them to pay even if they wish to,” Cruz said. “As commercial spaceflight expands rapidly, so does its impact on the FAA’s ability to operate the National Airspace System. This proposal accounts for that.”
All this may be true, but this new tax is just another way for the corrupt DC crowd to squeeze more money from American citizens without any real benefit, and at the same time abdicate Congress’s responsibilities to control spending and the federal bureaucracy.
First, the bill specifically creates a special FAA budget line item in which to dump these taxes, and then gives that 70% of that money forever to the FAA’s commercial space office (AST).
70 percent of the amounts deposited into the fund shall be available for such purposes and shall be available without further appropriation and without fiscal year limitation. [emphasis mine]
What a great system to grow government, divorced entirely from the legislative and elective process!
Second, the bill assumes that AST must grow exponentially to match the growth in launches, an assumption that is false. AST might need more staffing and money in the coming years to meet the increased number of launches, but there is no evidence it needs to grow this much. Once Trump took office and AST was no longer forced to do the scads of unnecessary paperwork forced on it by Biden it has not only had no problem meeting the increased launch rate in 2025, the red tape faced by rocket companies has actually gone down.
Like pigs at the trough
Cruz’s proposed taxes and fees will simply fund the endless growth of a new government bureaucracy that isn’t needed to this extent. Eventually this bloated bureaucracy is going to have to to justify its existence, and to do so I guarantee it will then lobby for more launch regulations. That is what has always happened when Congress has created these kinds of independently-funded bureaucracies, and I guarantee it will happen here again with the FAA.
Thank you Ted Cruz and our Republican-controlled Senate! And Republicans wonder why they have had difficulty getting the voters to support them enthusiastically. Why should we? We vote to have them shrink government, and all they ever do is grow it.
Elon Musk’s call for a new political party during his Trump kerfuffle two weeks ago amid his disgust at the budget proposal in Congress might very well make sense.
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Cruz is that most infuriating of Republicans, that can get in front of a camera and say great things, or write an op-ed, or do an interview, that make you think he’s actually a republican, and wants to get important things done, and is paying attention, etc. Then he goes into the back room and acts like a fully certified member of the uniparty/deep state.
Which is what makes Rubio a wonder at State. I thought he was the same way.
As the Psalm says, “Put not your faith in princes.”
I don’t have any ideological problem with space launch providers paying airspace usage fees of some sort, or even with basing them on payload weight – after all, a widebody airliner in revenue service pays a lot more FAA fees than a weekender recreational pilot with a Piper Cub. But Robert is correct that the way these fees are structured in Cruz’s legislation puts them on an open-ended escalator. One hopes someone with better sense introduces some amendments in committee to fix this but it never pays to be too hopeful anent such things.
It’s also worth noting that this is – to a first, and probably even a second, order basis – a tax that will fall almost entirely on SpaceX. SpaceX currently lofts more than 85% of all mass sent to space in a year’s time worldwide, and probably over 90% of all mass launched from US soil. So Elon and Gwynne definitely need to get their lobbyists busy on amending this proposal to keep its future exactions from ramping up unreasonably.
I think space outfits shouldn’t pay any taxes for a long while–it is a tough field and needs every advantage.
Sports team owners like Mark Cuban can be soaked for all I care.
I don’t grouse when I pay property tax because I drive on roads.
Ted’s background is that of an elite lawyer. (A pretty good one, I might add.)
One wonders how frequently you would see legislation like this advance in Congress if we had more business owners — especially small business owners — elected there, and fewer lawyers?
They shouldn’t be issuing individual permits in launches anymore than we do for individual aircraft flights.
Agreed.
As for businessmen in government….we have an example of that.
Two two party systems answer to whoever’s the richest or the loudest.
I say no one with an IQ below 140 should be eligible.
Ships pay port fees, airlines pay airport fees, way shouldn’t launch companies pay similar fees?
As for not paying taxes in general because the industry is hard.
Companies that do not make a profit do not pay taxes already.
They try to include property taxes and payroll taxes but I contend the employee should be the one fully credited with making that payment. And property taxes are to pay for the public services offered to the company like police or fire services and public transportation systems.
Companies already have ways to counter profits from one division with losses from another.
“Ships pay port fees, airlines pay airport fees, way shouldn’t launch companies pay similar fees?”
This is purely to pay for bureaucracy, not infrastructure. This amounts to a well-paid federal employee for an entire year FOR EACH LAUNCH.
Further, what port fees should, say, SpaceX pay for launching from a facility built entirely with their own money?
Richard M,
Yes, Cruz is an elite lawyer. He was, in fact, one of Alan Dershowitz’s star pupils at Harvard Law. That is certainly better than the more usual run of lawyers-turned-politicos – who tend more toward having been in the ambulance chasing and took-multiple-tries-to-pass-the-bar bottom-feeder end of the legal profession. But it would certainly advantage the nation if Congress was more diverse from the standpoint of pre-political professions.
It would be particularly helpful if more of them had ever had to meet a payroll. The late Sen. George McGovern didn’t try doing so until after he left office – and failed at it. Most politicos, especially the Dems, would likely find it impossible to make a go of even a sidewalk pushcart level of business endeavor.
Taxes are rents. Fee-for-service is a more relevant and equitable model.
What service does the FAA provide here, to whom, and what is it really worth?
Given what we see so far – companies setting standards, doing their own testing and certification – nothing, no one, and nothing. If FAA rubber-stamping actually offers any sort of guarantee of responsibility to the public or indemnification to the companies, I’m not seeing that.
Who controls the airspace around a launch sight?
And when an aircraft should be or is diverted around it who monitors all this activity?
Rockets are not aircraft where you inspect and certify them once a year or so. In fact they are expected to drop parts off. Most are expected to explode or disintegrate in flight.
Maybe this is his way to get on the Supreme Court ;)
Go walkabout and hope Trump can convince one of the walking dead in robes to retire.