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Space Government United States

Biden Takes Aim At SpaceX's Tax-Free Ride In American Airspace (nytimes.com) 222

Whenever a rocket launch occurs, air traffic controllers ensure the safety of commercial flights by managing airspace closures and monitoring rocket debris, without receiving compensation from commercial space companies like SpaceX for these services. The Biden administration's budget proposal aims to change this by suggesting that for-profit space companies begin paying for their use of government air traffic control resources. The New York Times reports: Commercial space companies are exempt from aviation excise taxes that fill the coffers of the Airport and Airway Trust Fund, which pays for the F.A.A.'s work and will get roughly $18 billion in tax revenues for the current fiscal year. The taxes are paid primarily by commercial airlines, which are charged 7.5 percent of each ticket price and an additional fee of about $5 to $20 per passenger, depending on the destination of each flight. Mr. Biden's budget proposal vows to work with Congress to overhaul the tax structure and split the cost of operating the nation's air traffic control system. His promise is based in part on an independent safety review report commissioned by the F.A.A., which advises that the federal government update the excise taxes to charge commercial space companies.

Mr. Biden's call for revising the decades-old excise tax structure is part of his push to make richer Americans and wealthy corporations "pay their fair share." In his State of the Union speech last month, Mr. Biden also called for raising taxes on private and corporate jet users, including increasing the tax that they pay on jet fuel to $1.06 per gallon from 21.8 cents per gallon over five years. That tax on fuel currently makes up around 3 percent of the annual revenue of the trust fund, which depends heavily on what commercial airlines and its passengers pay. Yet commercial space companies do not contribute to that fund or share any of the cost that the public bears when rockets are launched, said William J. McGee, a former F.A.A.-licensed aircraft dispatcher and a senior fellow at the American Economic Liberties Project, a consumer advocacy group. "This is a question of fundamental fairness," Mr. McGee said. "It would be the equivalent of having a toll system on a highway and waving through certain users and not others."

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Biden Takes Aim At SpaceX's Tax-Free Ride In American Airspace

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  • by Bruce66423 ( 1678196 ) on Saturday April 06, 2024 @02:12AM (#64374108)

    It's clearly fair that something that causes costs to a government agency pays those costs. However hiding a subsidy for NASA by failing to get them to pay as well would be featherbedding the public sector; remember that its NASA's poor record in developing space technology that has led to the private companies getting going.

    • by rossdee ( 243626 )

      And what if SpaceX are lifting a payload for NASA ?

      do they still have to pay the tax?

      • And what if SpaceX are lifting a payload for NASA ?
        do they still have to pay the tax?

        If contractors and their employees are working for the government, do they all still have to pay taxes on the money they're paid? So far the answer seems to be yes.

        • The FAA is there to protect the aviation industry, not the Space Industry. During a rocket launch, they arent worried a plane will get in the rockets way, they are worried the rocket will blow up and debris will hit a plane. Here is an idea, instead of paying billions to government for something as simple as a broadcast to airlines and the public that reads: on this date, we plan to launch a rocket from here. Advise you stay away during launch window for a few hundred miles down range.

          The airlines will h
          • by narcc ( 412956 ) on Saturday April 06, 2024 @05:37AM (#64374320) Journal

            It's true that Libertarians are simple and have a very childlike understanding of the world, but this is just a bit too much. I'm all for poking fun at their anti-government silliness, but try to make it seem at least a little believable!

            Honestly, not even Elon could take that laughable idea seriously.

            • by JustAnotherOldGuy ( 4145623 ) on Saturday April 06, 2024 @09:55AM (#64374688) Journal

              You're not wrong, as proved by the Libertarians down-voting you.

              The problem most libertarians have is they never think that they'll be the ones getting screwed. It'll never be their wife or child who'll die from some untested medication or contaminated food or an unsafe electrical appliance.

              No, it'll always be the other guy whose wife or kid dies, and then the Magical Invisible Hand Of The Market will punish that company and force them out of business, and then they'll be safe, see?

              But it won't be your wife or your kid, no way. And if it IS your kid or your wife, well shucks, you can just take them to court for damages, right? Because that will bring your wife or child back, right?

          • The space industry is part of the aviation industry.

          • by Registered Coward v2 ( 447531 ) on Saturday April 06, 2024 @08:56AM (#64374576)

            The FAA is there to protect the aviation industry, not the Space Industry. During a rocket launch, they arent worried a plane will get in the rockets way, they are worried the rocket will blow up and debris will hit a plane. Here is an idea, instead of paying billions to government for something as simple as a broadcast to airlines and the public that reads: on this date, we plan to launch a rocket from here. Advise you stay away during launch window for a few hundred miles down range. The airlines will handle the rerouting. Problem solved, and look! Less government.

            It's called a NOTAM: Notice to Airmen. [faa.gov]

          • The airlines will handle the rerouting. Problem solved, and look! Less government.

            It's great when you can just unilaterally move your problems and responsibilities onto others.

        • by tbuskey ( 135499 )

          I know if a contractor is working for the post office, there are some exemptions. Ex: When buying the paint and other materials for the job, the state taxes are not charged.

      • And what if SpaceX are lifting a payload for NASA ?

        do they still have to pay the tax?

        It's all about removing hidden subsidies. If the people of the USA want to pay for a space program, that's fine. But let's have them pay for it explicitly without hiding the costs in the budgets of other agencies. So yes, NASA should pay in this situation.

      • by Zocalo ( 252965 )
        Operator of the launch vehicle pays - they're the one directly requiring the ATC support - and it's up to them how they pass any costs downstream to their customers. The operator with the most competetive overll option - which, at least nine times out of ten, will be the bottom line - wins.

        That's how the free market the US adores is supposed to work, yes? This seems like a pretty good way of levelling the playing field, as long as everyone is on the same charge sheet - no exceptions.
      • And what if SpaceX are lifting a payload for NASA ?

        That's easy. SpaceX charges NASA more for the payload to cover the new tax.

    • by sherrysj ( 1077163 ) on Saturday April 06, 2024 @03:08AM (#64374184)
      It makes no sense to complain of a poor record of development for an agency that routinely has massive arbitrary budget cuts and priority redirection. If someone cut your budget by half every four to eight years, and rearranged your long-term tasks, you would have less productivity, too.
      • Re: (Score:3, Insightful)

        by narcc ( 412956 )

        Exactly this. Still, like the post office, I think they do surprisingly well given that they're actively being sabotaged.

        • Except for the one place I lived where we were the training route for new hires, yes, the USPO does great but -always- having the shitty new person showed and it sucked.

    • by echo123 ( 1266692 ) on Saturday April 06, 2024 @04:13AM (#64374250)

      It's clearly fair that something that causes costs to a government agency pays those costs.

      Biden is also targetting corporate jets [nytimes.com] to fund the FAA, as they pay proportionally a tiny amount of tax while greatly increasing the burden placed upon the FAA who has to serve all those additional non-commercial airports.

      From TFA:

      The [FAA] taxes are paid primarily by commercial airlines, which are charged 7.5 percent of each ticket price and an additional fee of about $5 to $20 per passenger, depending on the destination of each flight.

    • by quonset ( 4839537 ) on Saturday April 06, 2024 @06:21AM (#64374362)

      Didn't read or understand the blurb, did you? This is for-profit space companies, i.e. companies which want to make money off of launching things into space. Last I checked, NASA wasn't for-profit.

      • by Bruce66423 ( 1678196 ) on Saturday April 06, 2024 @08:35AM (#64374536)

        To give NASA an implicit subsidy is what I'm objecting to. The money for the service which the FAA provides to NASA has got to come from somewhere; it's either explicit by having them charged in the same way, or implicit in requiring the FAA to provide the service to NASA without charge.

        Of course I'm assuming a rational response to the need for a NASA budget boost to allow this, and that may well be a mistake. But from first principles... ;)

      • by CAIMLAS ( 41445 )

        If this is supposedly for the purposes of safety, as they state, then why would it make any sense to exempt "nonprofit" or government agencies? It's an operational cost, for the purposes of safety. FIN.

        Don't be duplicitous.

    • by registrations_suck ( 1075251 ) on Saturday April 06, 2024 @08:50AM (#64374558)

      NASA is a govt agency. Why would it pay the same govt a tax?

      Just reduce its budget, if that's what you're looking for.

    • It's clearly fair that something that causes costs to a government agency pays those costs. However hiding a subsidy for NASA by failing to get them to pay as well would be featherbedding the public sector; remember that its NASA's poor record in developing space technology that has led to the private companies getting going.

      Even if NASA paid the FAA it's still just an accounting issue. NASA would ask for $X in it's budget to pay the FAA and transfer the money as needed; in the end teh taxpayers pay it's just a question of how the money is accounted for in a budget.

    • by caseih ( 160668 )

      Subsidy for NASA? NASA is a federal, funded agency, just like the FAA. How does requiring NASA to pay this tax make any sense?

      Minor correction. It is Congress' poor record in micromanaging NASA and legislated pork-barrel restrictions on what NASA can do that has finally led to the push for taxpayer money to fund private launch companies for designing and operating new launch vehicles. Way more bang for the pork buck than the old incumbents were providing.

    • If you're gonna bring fairness into this, then NASA has provide WAY more subsidy dollars to private space travel than they'd be getting back in return here.

  • by echo123 ( 1266692 ) on Saturday April 06, 2024 @02:13AM (#64374110)

    Promising Corporate Tax Increases, Biden Has Cut Taxes Overall

    President Biden has called for $5 trillion in new taxes on corporations and high earners. But his record so far is as a net tax cutter [archive.is].

    • Perhaps if you take your head out of his ass, per the government oversight committees: Bidenomics Levied an Inflation Tax on All Americans.
      Tax Policy Center senior fellow Howard Gleckman. âoeIncluding corporate tax increases, most households would pay more in 2022. About three-quarters of middle-income households would face a tax increase averaging about $300.
      NBC (not exactly an independent center outlet): Biden's $1.8 trillion plan for American families raises taxes. But his numbers don't add up.
      The I

  • by cowdung ( 702933 ) on Saturday April 06, 2024 @03:08AM (#64374182)

    Commercial space was always run by small companies trying to get by. SpaceX changed that. Now Space flights are more common and slated to be even more common. Adding a tax to fund the increasing demands it is putting on the federal agencies that support these programs is not entirely unreasonable.

    But I do wonder if that would make it harder for newcomers.

    I think this would mainly raise the cost for SpaceX with its own private launches and its many tests. But SpaceX can probably handle that. It also has enough of a competitive advantage that it can raise costs for its customers without getting hurt by the competition.

    • The barrier to entry is too high. There's also relatively few engineers so the existing players can easily prevent any real competition by temporarily boosting salaries to absurd levels. Nvidia did that with graphics cards hiring all the engineers who could make graphics cards and write drivers for them and starving AMD of talent.

      It's an antitrust violation because they are using their market leader position to corner the market but it's a touchy subject because you're talking about worker pay.

      Also c
  • No. (Score:5, Insightful)

    by backslashdot ( 95548 ) on Saturday April 06, 2024 @03:54AM (#64374226)

    Space development is critical, we shouldn't be taxing it this early. After the space industry takes off, then we can. Taxing it this early is just stupid. If anything, we should be subsidizing it.

    • Re:No. (Score:4, Informative)

      by crunchygranola ( 1954152 ) on Saturday April 06, 2024 @08:36AM (#64374538)

      After the space industry takes off, then we can. Taxing it this early is just stupid. If anything, we should be subsidizing it.

      Currently we are subsidizing it. That is what excusing it from fees to cover government costs associated with his launches is. The issue is that it is time to stop this subsidy.

      It would appear that SpaceX has "taken off" already. It has launched 326 times. Last year SpaceX conducted almost half of all space launches in the entire world. The launch business is turning a profit. SpaceX lost $500 million last year only because of a separate money losing business venture - StarLink. And yes, it is a separate business, it just as internal space launch customer within the corporation. Having captured nearly half of all space launch business that exists now there is limited space for it to expand (indeed we need to make room for competitors) and is making a profit at it we can reasonably say it has well "taken off". This is why removing the subsidy is under consideration now.

      • You're saying we need a SpaceX competitor while at the same time saying we need to make them have to pay a launch tax. You realize that makes it harder to raise money right? It's already tough because investors will ask "well what about SpaceX" .. now it's going to be "what about SpaceX and what about the launch taxes?" It's adding risky to an already risky endeavor, that significantly reduces the pool of gamblers willing to make a bet.

  • by QuantumFTL ( 197300 ) on Saturday April 06, 2024 @04:01AM (#64374238)
    Most space launch companies are inefficient and ineffective. SpaceX has the margin to pay these taxes, those unfortunates don't. If you want to kill competition in an industry, tax it enough that only the large corporations can survive the loss, and add some complicated regulations in for extra effect. No one else has anything close to what Starship may become, and further reduction in margins will ensure that SpaceX will have a defacto monopoly on non-military space launches while their competitors are strangled paying for FAA services that is disproportionately benefit owners of private jets and charter flights for the rich.
  • Maybe those companies will start charging by the pound when the government wants to use their vehicles? Even better, maybe they'll start tacking on long-distance charges for all those satellites.

  • by jonwil ( 467024 ) on Saturday April 06, 2024 @05:51AM (#64374346)

    Anyone who uses the services provided by the FAA in some way (be it an airline, private jet, private pilot flying for fun, private space company launching a rocket, government plane, TV news helicopter, charter plane, NASA launching a rocket, military aircraft or anyone else) they should pay for using those services.

  • lol, no (Score:2, Insightful)

    Look, I know it's embarrassing having private entities outdo you in space, but use your head. Look at it as an investment.
  • by markdavis ( 642305 ) on Saturday April 06, 2024 @07:04AM (#64374408)

    >" "This is a question of fundamental fairness," "It would be the equivalent of having a toll system on a highway and waving through certain users and not others."

    "Fair" is in the eyes of the beholder.

    We already do wave certain people through tolls. We often let motorcycles, HOV, E-vehicles, frequent users, local users, elderly, or disabled pay less or nothing for tolls. And you can argue HOV fosters less road usage, and motorcycles can't really be HOV and are also so light they put almost no wear on roads and take up less space and are extremely efficient and less polluting. More axles pay more, huge trucks pay a ton more. Many would argue that is more fair. Some might argue parts are and parts aren't. As for income-based or age-based tiers, many would argue that is far from "fair" (nothing is as "fun" as punishing people who spent their lives being responsible, making good choices, and working harder, right?)

    Presumably, the tax breaks on commercial spacecraft launches was done to foster innovation and development. Now that we have maybe met such objectives, if they are profitable, maybe we should charge them at least the same as airlines.

    • We have a single instance of a successful space flight company. The others are working on it. Increased costs will foster a monopoly. How is that good?

    • motorcycles can't really be HOV and are also so light they put almost no wear on roads and take up less space and are extremely efficient and less polluting. More axles pay more, huge trucks pay a ton more. Many would argue that is more fair

      Basically all road damage is done by those huge trucks. Automobiles, even the biggest and dumbest coal-rolling dudebro trucks with the shortest sidewalls, do basically zero damage to roads. It's vehicles like buses that might weigh ten tons empty, and dump trucks full of gravel, that do the road damage. Motorcycles are unfortunately NOT more efficient or less polluting than modern econoboxes on average; some of these new cars are so efficient and have such effective emissions systems that it's not even a co

      • >"Motorcycles are unfortunately NOT more efficient or less polluting than modern econoboxes on average"

        That entirely depends on the motorcycle and car you are comparing. A small, modern motorcycle can get 70+ MPG and has all the same pollution controls as most modern cars. The AVERAGE of passenger vehicles on the road in the USA is 25.3 MPG. And I will count a dozen huge SUV's for each econobox car on the road. My motorcycle is a 2011, has only a single CAT, and has massively powerful 4cyl 16v 1.4L

      • If we were to factor in the externalities of doing business, a net positive would result for society. If the cost of goods included the real cost to the infrastructure and environment, we would stop shipping natural ressources accros the globe and then shipping the refined product back.

  • Launch from Australia instead of the US. Less air traffic, more room, no fees.
    Really space launches can launch from anywhere, tax them and they’ll move.

    • by Baron_Yam ( 643147 ) on Saturday April 06, 2024 @08:14AM (#64374512)

      >space launches can launch from anywhere

      This is actually not true in practical terms; the amount of energy required to make orbit varies considerably based on your distance from the equator and the direction you launch in.

      Typically you want to be as close to the equator as you can manage and able to launch to the East with a lot of safe 'abort' territory under that flight path in case something goes wrong.

  • I think the Ayn Rand estate might sue over this clear appropriation of her fictional material. Where's John Galt?

  • by MpVpRb ( 1423381 )

    SpaceX vastly outperformed every other global company, organization and national lab, racing past them like they were standing still
    Once-great NASA has turned into a jobs program for career bureaucrats and the politically connected, wasting vast sums on awful programs like SLS
    Instead of congratulating the winner, the government wants to punish them

    • by Baron_Yam ( 643147 ) on Saturday April 06, 2024 @10:09AM (#64374710)

      If they're so good, there's no longer a need to subsidize them, is there?

      • Good point and you can't just tax SpaceX. You have to tax the next and other smaller guys who want to do space stuff in USA. Raising the barrier to entry and cost to other continuing hopefuls. You're free to make the "rich-guys play rich-guy games" case here, and you'd be right IMO. And I still think it's bad policy (maybe illegal) to tax only one corporation or to tailor tax law to intentionally focus on one entity. And overall, "commercial space" isn't even just now getting started in my long view.
        • It doesn't have to be all-or-nothing. If the goal is to maximize innovation and increase competition, you can have a progressive tax break (though as a non-accountant I may have flipped a sign here when switching from 'tax' to 'tax break').

          Essentially, set up the relevant taxes so they start off near-zero and rise with the annual gross of the company. Or if it's a subsidy, reduce it on the same basis.

          Either way, it helps launch companies to give them the opportunity to get past the barriers to entry and e

  • If it moves, tax it. If it stops moving, subsidize it.

    I pointed out once EVs got prevalent enough, government would stop subsidizing and start taxing. I got modded down, by clowns who, when government inevitably changed its mind, would later dutifully regurgitate the talking point that government now needs taxes for roads.

  • I'm trying to figure out what SpaceX's share of that $18 billion is.

    Seems like they launch once a week and when they do they block out a 1000 square miles for an hour.
    There are 168 hours in a week, and 3 million square miles in the US, so that's (1/168) * (1000/3,000,000) * $18 billion per year = $35.7k per year.

    Do I do that right?
    Is the government really complaining about that tiny an amount of money?

  • Musk (Score:2, Insightful)

    by groobly ( 6155920 )

    They are simply going after Musk in any way they can.

  • When doing the infrastructure bill, it should have been funded by raising gas/diesel tax slowly. Each month. And put a tax on commercial EV chargers. Again, slowly increasing. Instead, the gop took it from general funds and increased deficit.

    1 thing is that money collected for funds, such as the aviation fund, should not be accessible by CONgress. Most funds are in trouble because of 40 years of reaganomics that premised on stealing from these funds while giving rich large tax cuts. Insane.

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