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California Seeks To Tax Rocket Launches, Which Are Already Taxed (arstechnica.com) 417

The state of California is looking into taxing its thriving rocket industry. The Franchise Tax Board has issued a proposed regulation for public comment that would require companies that launch spacecraft to pay a tax based upon "mileage" traveled by that spacecraft from California. Ars Technica reports: The proposal says that California-based companies that launch spacecraft will have to pay a tax based upon "mileage" traveled by that spacecraft from California. (No, we're not exactly sure what this means, either). The proposed regulations were first reported by the San Francisco Chronicle, and Thomas Lo Grossman, a tax attorney at the Franchise Tax Board, told the newspaper that the rules are designed to mirror the ways taxes are levied on terrestrial transportation and logistics firms operating in California, like trucking or train companies. The tax board is seeking public input from now until June 16, when it is expected to vote on the proposed tax. The federal government already has its own taxes for commercial space companies, and until now no other state has proposed taxing commercial spaceflight. In fact most other states, including places like Florida, Texas, and Georgia, offer launch providers tax incentives to move business into their areas.
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California Seeks To Tax Rocket Launches, Which Are Already Taxed

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  • Stupid (Score:5, Insightful)

    by JustAnotherOldGuy ( 4145623 ) on Thursday May 04, 2017 @10:33PM (#54358711)

    This is so stupid that it makes my head hurt. Way to fuck over the private space industry, California!

    • Re:Stupid (Score:5, Insightful)

      by The Snowman ( 116231 ) on Thursday May 04, 2017 @10:42PM (#54358741)

      Way to fuck over the private space industry, California!

      The private space industry will not be fucked over. They will leave, and go to places like Texas and Florida who, according to the summary, offer tax incentives to do business there.

      The only entities who might be "fucked over" are the California citizens who might otherwise work at these companies. Although, if they are smart, they will move to Texas or Florida too.

      • Re: (Score:3, Insightful)

        by kamapuaa ( 555446 )

        Right, just like Hollywood closed and now all movies are made in Vancouver.

        Tax breaks are a temporary thing done to attract business. Once that business is attracted, tax breaks are yanked away.

        • Re:Stupid (Score:5, Informative)

          by ZiakII ( 829432 ) on Friday May 05, 2017 @01:28AM (#54359155)
          Umm bad example you do realize that movies were originally made in NJ then due to patents and taxes moved to CA?
        • Re:Stupid (Score:5, Informative)

          by thegarbz ( 1787294 ) on Friday May 05, 2017 @04:49AM (#54359527)

          Right, just like Hollywood closed and now all movies are made in Vancouver.

          You'd be amazed at the number of American block busters not even made on the continent let alone Vancouver or California. Your attempt at sarcasm fails due to it actually being very real. The industry is quite sensitive to tax breaks, and while Hollywood may be the heart of the industry, the production and a lot of the dollars actually go elsewhere.

          That said it was funny seeing someone in Australia install yellow coverings on all our black traffic lights in a city to try and make the country look more like America.

          • The funny thing is that most modern, new American traffic lights are in black cases as well...
        • Re:Stupid (Score:4, Insightful)

          by ooloorie ( 4394035 ) on Friday May 05, 2017 @08:09AM (#54360115)

          Right, just like Hollywood closed and now all movies are made in Vancouver.

          Actually, movies and TV series are increasingly being made outside California. Canada is popular, so are Europe and the American South. And the reason is almost entirely the cost and hassles of working in California.

        • Right, just like Hollywood closed and now all movies are made in Vancouver.

          What's funny is that this is exactly what is happening. The only reason it hasn't finished happening is inertia. The governments of CA are doing their level best to drive all business out of the state. I am all for environmental regulations because we all live here, and worker protections because I am a worker, but this latest idea is still beyond idiotic.

          • Re:Stupid (Score:4, Insightful)

            by LVSlushdat ( 854194 ) on Friday May 05, 2017 @08:51AM (#54360381)

            What do you expect? California is trying to copy the old USSR, with all of its communist ideas, which will only work successfully *IF* they put up an "Iron Curtain" along their eastern border. Otherwise there will be (and IS) a mass exodus of people and companies who are fed up with California's bullshit.. The wife and I left in the mid 90s when "Dear Leader" Brown was elected governor the first time...

      • Re:Stupid (Score:5, Insightful)

        by Phylter ( 816181 ) on Thursday May 04, 2017 @10:58PM (#54358813)
        California is where new industries go to die. Why bother going there where companies that create jobs are punished? You're right, they'll go elsewhere and thrive instead of staying there.
        • Re:Stupid (Score:5, Insightful)

          by Trailer Trash ( 60756 ) on Friday May 05, 2017 @07:15AM (#54359899) Homepage

          My city (Franklin, TN, part of the Nashville/Franklin/Murfreesboro metro area) is aggressively recruiting California companies to relocate here. Our two biggest scores within the last couple of years were the Nissan North America headquarters (brought 1300 people from the president down) and the Carl's Jr./Hardees headquarters. CA is bad enough that we're getting companies of that size to literally pack up and move 3000 miles.

          It doesn't hurt that we have no geographic boundaries to growth, so land is still pretty cheap. $500K will get you a 3 bedroom 1300 sq ft bungalow in Burbank. Here, it buys you a 3000 sq ft house on an acre, or more house and less land if you'd like.

          And we have about the same sales tax rate as CA (9.25%), but no state income tax.

          Would it surprise you to know that our economy is thriving?

      • Re:Stupid (Score:5, Insightful)

        by Anonymous Coward on Thursday May 04, 2017 @11:44PM (#54358939)

        The problem is Californians bring their political diseases when they move to saner places.

      • Well, a lot of them have moved here. So bring em! The gun manufacturers that moved here can use some more company!
      • by idji ( 984038 )
        They cannot go to Texas or Florida if they want to do polar launches to the south - that's why they launch from California.
        I think they should charge the rockets for milage of damage they do to the road network. [hint =0]
        • by chill ( 34294 )

          Isn't that was Alaska [wikipedia.org] and Virginia [wikipedia.org] are for?

      • Please don't encourage more people to move to Texas and Florida. We can't get the last batch of job-seekers to leave and they vote the same way they did in the places they left.
    • Re:Stupid (Score:4, Funny)

      by presidenteloco ( 659168 ) on Thursday May 04, 2017 @10:49PM (#54358769)

      Luckily, our rockets travel kilometers, not miles, as in "10 kilometers down range - all systems nominal". So I think we're good.

    • Do what You Love (Score:5, Insightful)

      by SuperKendall ( 25149 ) on Thursday May 04, 2017 @11:02PM (#54358821)

      Isn't this just California doing the thing it is best at?

      Couldn't you simply write:

      Way to fuck over the INSERT TYPE OF BUSINESS HERE industry?

      That pretty much defines California. Hell, even Apple with more money than God built a campus in the shape of a wheel so they could role it out of the state when the taxes became too large a burden even for them.

    • Can you imagine the astronomical cost (no pun intended) of a deep space mission were this "miles from California" tax actually implemented?

      Best quote:

      The Franchise Tax Board proposal said certainty about tax treatment “will lead to increased activity in the industry and will foster an atmosphere of growth and prosperity once present during the golden age of California’s aviation industry, thereby creating jobs as the industry thrives in this state.”

      I'm curious... do they have the authority to even tax what occurs outside of their state territory?

      Well, good luck with that California.

      • Re: Stupid (Score:2, Interesting)

        by Anonymous Coward

        Can you imagine the astronomical cost (no pun intended) of a deep space mission were this "miles from California" tax actually implemented?

        Can you imagine how stupid you would look if you missed a key part of the discussion?

        Oh wait, no need, you really did:

        In short, the amount of tax on commercial spaceflight companies will decrease the farther the spacecraft travels from California. âoeMore mileage will mean less tax, and less mileage will mean more tax,â Grossman said.

        Works the opposite way from how you thought, huh?

    • I'm reminded of a quote:

      "If it looks fun, tax it until it isn't"

      I may be misremembering, and can't find the original... but you get the idea.

  • by Dunbal ( 464142 ) * on Thursday May 04, 2017 @10:37PM (#54358727)
    De-orbit it so it lands in California - preferably the governor's office in Sacramento. With a little sign saying "miles from California: ZERO".
    • by TWX ( 665546 )

      I wonder if SpaceX saw this development coming, and was the real reason they decided to land the first stage intact...

      • Re:Oh that's easy (Score:5, Informative)

        by michelcolman ( 1208008 ) on Friday May 05, 2017 @03:31AM (#54359365)

        Amazing how nobody bothers to read the actual regulation, not even the article authors ("we're not exactly sure what that means either").

        If I understand the actual regulation [slashdot.org] correctly:

        For every launch from California, they take the number of miles traveled within the state of California and divide this by the total number of miles from launch to separation. This is one factor in the calculation, weighted at 80%.

        Another factor, weighted by 20%, is the number of launches from California divided by the number of launches in total for that contract. That means that if you have one expensive launch from Texas and one cheap launch from California, under the same contract, California will take a disproportionate amount of tax because they will consider 50% of the total contract value for the "departure factor" part.

        The regulation has an example with numbers. It looks like they want companies to launch high value missions from California and cheaper missions from elsewhere, since the "departure factor" appears to be the dominant factor in the calculation. And they want California launches to take place as close to the border as possible, minimizing distance traveled over the state.

        • by jonwil ( 467024 )

          Does anyone even launch spacecraft from California these days? I thought all space launches went from the launch complex in Florida or one of the new private space launch sites in places like Texas or Utah or wherever.

    • Why would you want to maximize the taxes you have to pay? Is that some sort of persecution complex or are you just really dumb?

    • It would still be very far from where it started in the desert. Better to launch when nobody's looking, land it back on the pad (I'm still amazed they can do that), and tell the tax man, "Dude, it's right there, same place it was yesterday. What's the tax on not moving?"
  • Fair's fair (Score:5, Funny)

    by fibonacci8 ( 260615 ) on Thursday May 04, 2017 @10:45PM (#54358759)
    I think it's fair to count the miles of road traveled just like the other forms of transportation. Travel off road should be exempted.
  • by BitterOak ( 537666 ) on Thursday May 04, 2017 @10:46PM (#54358763)
    Won't this encourage companies to launch their rockets from different states, possibly taking jobs with them? What is the point of this tax?
    • by nnull ( 1148259 ) on Thursday May 04, 2017 @11:17PM (#54358865)
      Industry itself. Name me one place in the US where you have everything at your finger tips, literally without taking a huge dent in logistical and operating costs. This is why I operate in California and this is why so many still operate in California. I've heard stories of those that moved to Henderson, NV and it's not all roses over there either, especially when your logistical costs sky rocket and the huge labor shortage is preventing you from operating (Amazon in Las Vegas didn't last long, did it?).

      And this is where California and its ridiculous taxation is quite well calculated. Not too much to force your hand and just below the level, as annoying as it is.
      • Re: (Score:2, Insightful)

        by Anonymous Coward

        I've worked at a couple smaller hardware based companies including on the East Coast and the Midwest, and now work at a place on the West Coast. There are plenty of other cities around the US that have quite a tech industry and worker pool to draw from, while having an interesting enough scene that you can get harder to find employees to relocate there. I've also seen start ups and companies built in smaller towns in the Midwest who draw in people looking for quieter towns and low cost of living.

        The only

    • by Solandri ( 704621 ) on Thursday May 04, 2017 @11:24PM (#54358887)
      The U.S. has two primary launch sites.
      • Cape Canaveral in Florida. Launches into equatorial orbits are done here because it's the further south of the contiguous 48 states. The closer to the equator you launch from, the higher your eastward velocity, and the less energy you have to expend to achieve equatorial orbit. So the further south you can launch a rocket from, the greater its payload capacity using the same amount of fuel. (The southern tip of Texas would be another option, but any Eastward launch from there would pass over Florida, creating a hazard if a rocket blows up or crashes.)
      • Vandenberg Air Force Base in California. Launches into polar orbits are done here because there's nothing to the south but open ocean, and it's part of the contiguous 48 states. Polar orbits are useful for earth-monitoring satellites (both for earth sciences and spying) because the satellite can cover all latitudes. Equatorial orbits generally limit you to about 15-30 degrees north or south of the equator. In theory you could do this over any of the states bordering the Gulf of Mexico, but that creates a hazard for the Carribean and Central/South American countries if a rocket blows up. The East coast (e.g. Maine) is not an option because you want to launch the rocket slightly to the west, so that the Earth will rotate underneath it allowing coverage of all longitudes.

      If this tax does pass, expect companies like SpaceX to move out of California, and either Sea Launch to be revitalized or a new company doing the same thing as Sea Launch (launching rockets from a platform in the middle of the ocean) to spring up.

      • Instead of just hearing "tax" and waving your hands that they would create oceanic launch platforms, you might instead want to revise your logic to consider the likely situation where the cost of the tax is below the cost of developing a new launch site.

        I mean, seriously, how many rocket scientists drive with fake license plates on their cars to protest taxes? That is the sort of person it would take to waste a whole bunch of money moving their business over the mere existence of taxes without even doing a

  • by Anonymous Coward

    If you try to sit, I'll tax your seat.

  • ...they're just going to tax California rocket fuel [wikipedia.org] (or maybe just Mendocino rocket fuel [getyarn.io])? I dunno though, haven't RTFA'd (R'dTFA?).
  • Their stated intention is to amend the proposed regulation to also include a tax on wheelage.

  • For Texas [battleswarmblog.com]. Which has a space launch industry of its own, low taxes, and a business climate that's already luring companies from California...

  • The only launches that take place in California are for polar orbits. California is used for these launches because the Earth turns away from the rocket's path and if there is a problem, the rocket drops into the Pacific. There is no advantage being close to the equator (like is had with Cape Canaveral).

    I would think that Oregon and Washington state would offer the same advantage for polar launches and would like to bring in the space launch business which they can do now by simply not charging a state ta

    • by psergiu ( 67614 )

      Well they can move to Texas and launch from Lubbock or Amarillo. Out west is nothin' but sand, rocks and California - so if any rocket falls, nothing important (to a Texan) will be hurt.

    • LOL we don't even have oil refineries in Oregon, you think we want a freakin' spaceport?!

      I guarantee you that if you actually filed the regulatory documents for that and you had sufficient funding to actually build the thing, we would pass a tax higher than California's before you could even finish your first attempt at an environmental impact statement.

      We don't even have private beaches here. Most of our coast is continuous parks. The path navigable by foot closest to the ocean is a public right-of-way, so

  • by jet_silver ( 27654 ) on Thursday May 04, 2017 @11:04PM (#54358829)

    California loves taxes.

    In most other states, for example, beverage containers have a tax ("deposit") that is meant to get all the containers taken away from public spaces, whether by gleaners or by thrifty citizens. In contrast, California sets the tax low enough that it's not worth redeeming unless you're desperate - figuring enough people will blow it off that the state can just keep the majority of it.

    Dave Barry said it best: California taxes are high, government is incompetent and corrupt in contrast to Florida: taxes low, government incompetent and corrupt.

    • In most other states, for example, beverage containers have a tax ("deposit") that is meant to get all the containers taken away from public spaces, whether by gleaners or by thrifty citizens. In contrast, California sets the tax low enough that it's not worth redeeming unless you're desperate

      So you are saying that the tax ("deposit") in CA is lower than in other states?

      Way to go proving your claim that "California loves taxes"!

    • The California Refund Value (CRV) is the amount paid to consumers when they recycle beverage containers at certified recycling centers. The minimum refund value established for each type of eligible beverage container is 5 cents for each container under 24 ounces and 10 cents for each container 24 ounces or greater.

      Here in Oregon we just raised it to 10 cents for everything, even water. But I think California is doing fine.

      In the `90s what you said was actually true. But it is a really bad idea to treat mem

    • If it moves... (Score:4, Insightful)

      by slew ( 2918 ) on Friday May 05, 2017 @02:44AM (#54359285)

      There we go again...

      If it moves, tax it.
      If it keeps moving, regulate it.
      And if it stops moving, subsidize it.

      An classic observation by a former governor of California...

  • class war (Score:4, Insightful)

    by supernova87a ( 532540 ) <kepler1@DEBIANhotmail.com minus distro> on Thursday May 04, 2017 @11:09PM (#54358841)
    How about we stop trying to fund California (which by the way provides well more than its share of tax revenues to the federal gov't compared to its receipts) using taxes on new industries and new people who help us create new value, and instead remove the tax protections for entrenched old people who got here first, got theirs, and now are happy to put most of the share of the burden on everyone else? Prop 13, unions, local regulations that prevent affordble housing -- I'm looking at you.
    • by sconeu ( 64226 )

      Prop 13? Uh no.

      I bought my house in 1999. If I had to pay taxes on the *CURRENT VALUE*, I wouldn't be able to afford it.

      Remove the Prop 13 protections from *COMMERCIAL* property.

  • All companies launching spacecraft that are based on California will promptly move out of California.
  • will have to pay a tax based upon "mileage" traveled by that spacecraft from California. (No, we're not exactly sure what this means, either).

    Ars Technica must have a reading comprehension problem because it's spelled out pretty clearly in the proposal exactly what it means.

  • Next time I have to tank my rocket at the gas station I will reconsider and switch to electric engine!
  • ....California's thriving rocket industry moves to Texas. Film at eleven.

  • "I told you taxes were sky-rocketing!"

  • California has been working very hard to drive out all businesses AND taxpayers with the highest overall taxes in the entire country. They'll keep piling them taxes on until the breaking point is reached.

    I recently started thinking about finding employment in another state.

  • Living in this state is simply Unreal. They can pry my 8 Ball out of my cold, dead hands.

  • a tax attorney at the Franchise Tax Board, told the newspaper that the rules are designed to mirror the ways taxes are levied on terrestrial transportation and logistics firms operating in California, like trucking or train companies.

    Huh? I thought the justification for charging commercial vehicles based on miles was due to them wearing down roads, which then require tax money to fix. Why would you tax a rocket based on how far it travels? Do they think the rockets are wearing down the vacuum of space? Man, my state is run by nuts.

  • With taxes you buy - civilisation. Somehow, I think you actually want things like a sewage system, a justice system, a police force, roads, an education system. Perhaps you'd prefer to have ones that worked, too.
    So they have to be paid for.
    Sharing costs is good way to do things, especially for things that are very costly but quite rare, like earthquakes, or major heart attacks.
    Why do people hate taxes so much? The results do have considerable value - have you been to, say, Papua New Guinea?

    • I don't hate taxes as such. I hate being nickel-and-dimed all the time. For instance, Virginia has a car tax. It's extra paperwork to fill out every year, you have to get the stupid sticker onto the windshield, and if you forget the state just adds up fees instead of reminding you. I would much rather pay more in income tax. Income tax also has the added benefit of being less regressive so my previous grad student self could have paid less and my current white-collar self would pay more.

    • In Papua New Guinea they pay taxes, too.
      Unfortunately violence against women seems to be extremely high there.
      And also surprising: 75% of the population are some variation of protestant christians, the rest are catholics.

    • "With taxes you buy - civilisation"

      How much taxation is enough? How much is too much? In exchange for what? Those are the issues, not some stupid generalizing whining of, "Waaaah, I want everyone to pay high taxes because if not, anarchy!"
    • With taxes you buy - civilisation

      Yes, we know <eyeroll> But, you know, there's someplace between "California" and "Papua New Guinea" that still works well and isn't taxed to death.

      San Francisco's city budget is about the size of Tennessee's state budget. At what point do we realize that something just isn't right about this? We have roads, sewer, a police force, schools, etc. They're paid for with a state sales tax that's 9.25%, about what CA pays. But we don't have a state income tax. We realize that we don't need it.

      CA's tax

  • I am no lawyer but well, there are several sections that might cause some pain with this:

    Article 1, Section 8

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particula

  • We've got your power generation and a large chunk of your semiconductor business. Now give us your space industry.

  • Texas and Florida thank you. If you could do the rest of the nation a favor and continue to add new taxes to more businesses in California that would be great.
  • I don't see how a state can justify taxing you for something you do in another state let alone off-globe. I don't see how they think they can tax travel through space like they own it.

    And this isn't like taxes that are intended to fund the activity, such as gas taxes that repair the roads. It's not like SpaceX is wearing out the atmosphere (or space for that matter) and California wants to recoup money they spend repairing it or upgrading the infrastructure of it. This is just a blatant money grab.

    Not th

  • Wait until it matures and takes root deep enough so that it can't just pack up and move.
  • California has pollution issues beyond what most states suffer. The real message probably is please leave California as we have air quality issues and rocket exhaust is nasty stuff. Nevada might be a great spot to launch such missiles. In Nevada if a missile screws up the chances are it won't hit a populated area.
  • Unpopular opinion: Rocket launches have huge externalities and thus need to be tightly regulated (and taxed!) to ensure that the companies performing them are not taking advantage of their neighbors. That said, in my (more popular) opinion the private space travel industry needs all the help it can get right now, and assuming these taxes aren't minimal, the government should agree to waive them for the foreseeable future. In any case, I believe there is no harm in discussing what would be a fair tax.
  • that's the height at which air atmosphere stops and Outer Space begins, technically outside the country. So start listing mileage as only 62 miles until international space. treat like you would be shipping to Japan.

  • by p51d007 ( 656414 ) on Friday May 05, 2017 @08:04AM (#54360079)
    I was doing a ride-a-long with a local police chief in my hometown. We were driving around "the hang out spot" looking for kids firing off fireworks, which were illegal in the city, and called "littering". Saw this kid, teenager, firing off a bottle rocket. Had the headlights off, rolled right up next to him. Chief lowered the window, looked at the surprised kid, said..."I could write you a ticket for littering". Kid NEVER missed a beat. said.."how do you know it landed?". Chief looked at me, raised the window and we drove off, he said "well, can't argue with logic like that".

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