California Seeks to Tax Rocket Launches, Which Are Already Taxed

Megalith

Megalith

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The Golden State’s Franchise Tax Board has revealed that they would like to place an additional tax on launch companies who shoot off rockets in their territory. This tax would be based on mileage, which I assume means that costs would be calculated based on traveling distance. Unfortunately, the federal government already taxes commercial companies that include SpaceX and Virgin Orbit, so this may not make much sense.

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. Phil Larson, a former Obama White House official who now is assistant dean of the University of Colorado's College of Engineering and Applied Science, told Ars that California is discriminating against rocket companies by doubly taxing them.
 
Probleminfected said:
Yeah, but whats interesting is that CA pays more to the fed then they get back, I think to the tune of 30 billion a year.
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What is even more interesting is that people from Colorado, Delaware, Georgia, Illinois, Kansas, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, New York, Ohio, Oklahoma, Utah, Wyoming, etc. (those states vary year to year and metric to metric) rarely complain about it. Sure some of them do (New York and New Jersey at times) but boy are people in California hung up on this simplistic and often inaccurate idea like they are special in this regard or something (they aren't). It is also not as simple as how much you pay versus how much you get back (also something that is lost on people in California who make this argument). A much more accurate and realistic assesment of how states fare in the union is more complicated. One example can be seen here https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ Even then, California still isn't as important or as unique as it thinks it is.
 
Possibly doesnt make sense to launch rockets in high populated and smog pollution states
 
Bigbacon said:
a few of my friends in CA always wonder why people vote to tax themselves more. They have things on a ballot that adds more taxes and they vote yes to it.
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I wonder the same, and I've been here in CA my entire life. You'd think our roads would be made of gold or something with the amount of taxes that are collected here. I'm wondering where that bullet train is, and where it goes to.
 
Just a note, the Ars article is pretty much 110% complete BS. This has absolutely NOTHING to do with any new tax. THERE IS NO NEW TAX! And literally every state that has commercial launches taxes them via Gross Receipts Tax, Corporate Income Tax, and/or Sales Tax.

This is all about how a company allocates sales, income, etc for the purposes of calculating already existing state taxes. For many business types, these rules, regulations, and guidelines are already in place across pretty much every state in the union. An example is interstate trucking. States all pretty much have the same guidelines on how to allocate revenue and income a cross country transit from say Cali to Montana which is to apportion it based on miles traveled in a given state vs total miles traveled. Those guidelines don't exist anywhere for space launch operations which has meant that companies have had to try to apportion on their own.

So what this proposed regulation does is say, you are only required to apportion the revenue/income for a launches based on distance traveled in California in relation to the total distance to payload separation with an in state cap of 62 miles. This is basically a proposal that SpaceX came up with and submitted to the CA Franchise Tax Board so that their current existing practices would be codified into regulation/guidelines and make sure everyone is in agreement. It is likely that other states will end up with extremely similar tax apportionment guidelines.

As an example, say SpaceX sells a 100 million dollar launch from Vandenberg to a payload release point of say 200 miles AGL. SpaceX needs to calculate how much of the launch needs to be applies to their state corporate taxes. Based on the guidelines that would be 100 mil * (62mi/200mi), or 31 million with 69 million completely outside of CA FTB law. And if that launch cost SpaceX 50 million, then SpaceX would report a tax LOSS on the launch of 19 million. AKA, this is great for SpaceX.

TL;DR This is not a new tax and this is a SpaceX proposal. This is dealing with the esoteric domain of interstate/space tax apportionment. This is a rare completely shit article from Ars and the author should be ashamed.

For completeness, this is the actual document with the title of the regulation being "Apportionment and Allocation of Income of Space Transportation Companies": https://www.ftb.ca.gov/law/regs/25137-15/06162017-draft-text-for-Notice.pdf
 
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oROEchimaru said:
Possibly doesnt make sense to launch rockets in high populated and smog pollution states
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There are pretty much only 2 major US launch sites: Cape and Vandenberg. You pretty much don't get to choose which one you launch from because there is very little overlap in viable approved orbits between the two (based on available flight paths). Other potential US launch locations are generally subsets of the available orbits at Cape or Vandenberg. For instance, launches from any location in Texas would be restricted to a subset of the orbit available at Cape due to allowable flight paths. Flight regulations generally require that the whole flight path to orbit takes place over water. If you want to do a polar or retrograde orbit, you run into lots of problem trying to do it at cape that significantly reduce payload for polar orbit and retrograde simply isn't possible.
 
Master_shake_ said:
they are just chasing business out the door aren't they.

are they really 156 billion dollars in debt?
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Somewhere around there, though it does bear pointing out that it also has by far the highest GDP of any state. In terms of state debt as a % of GDP, California is at 6.74% with the US state average at 6.23%. It certainly isn't WV which is at 12.33% or Alaska at 10.42%.
 
aaronspink said:
There are pretty much only 2 major US launch sites: Cape and Vandenberg. You pretty much don't get to choose which one you launch from because there is very little overlap in viable approved orbits between the two (based on available flight paths). Other potential US launch locations are generally subsets of the available orbits at Cape or Vandenberg. For instance, launches from any location in Texas would be restricted to a subset of the orbit available at Cape due to allowable flight paths. Flight regulations generally require that the whole flight path to orbit takes place over water. If you want to do a polar or retrograde orbit, you run into lots of problem trying to do it at cape that significantly reduce payload for polar orbit and retrograde simply isn't possible.
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Also, we try not to launch over populated areas, so when the rocket explodes, it is over a large body of water, or it is high enough that it will not impact the ground.
 
aaronspink said:
TL;DR This is not a new tax and this is a SpaceX proposal. This is dealing with the esoteric domain of interstate/space tax apportionment. This is a rare completely shit article from Ars and the author should be ashamed.
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Thanks for posting this. The article slant sure seemed alternative facts-ish. Google search turned up articles on Quartz and Bloomberg.

California’s plan to tax rockets by the mile is exactly what space companies want

New Tax Frontier: California Offers Space Flight Rules
 
aaronspink said:
There are pretty much only 2 major US launch sites: Cape and Vandenberg. You pretty much don't get to choose which one you launch from because there is very little overlap in viable approved orbits between the two (based on available flight paths). Other potential US launch locations are generally subsets of the available orbits at Cape or Vandenberg. For instance, launches from any location in Texas would be restricted to a subset of the orbit available at Cape due to allowable flight paths. Flight regulations generally require that the whole flight path to orbit takes place over water. If you want to do a polar or retrograde orbit, you run into lots of problem trying to do it at cape that significantly reduce payload for polar orbit and retrograde simply isn't possible.
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Maybe they can launch over upper Michigans great lakes at Keweenaw Rocket Range. If they could fix up the place a bit?
 
nilepez said:
They're the 6th largest economy in the world, so apparently not.
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4th

5th

6th

7th

8th

9th

10th

In 4 easy steps of not paying attention TO why, and being self absorbed in the "but California" argument of, you are "great" while ignoring the fact that you are actually a part of the largest economy in the world and your status as 6th largest is entirely dependent on that fact! People who make fun of Texas or Alaska for being arrogant have, apparently, never looked at California!
 
Paul_Johnson said:
4th

5th

6th

7th

8th

9th

10th

In 4 easy steps of not paying attention TO why, and being self absorbed in the "but California" argument of, you are "great" while ignoring the fact that you are actually a part of the largest economy in the world and your status as 6th largest is entirely dependent on that fact! People who make fun of Texas or Alaska for being arrogant have, apparently, never looked at California!
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I have no idea what your point is, but unless you have evidence that their economy is shrinking then it's got nothing to do with what I wrote.
 
Why are we still talking about California, I thought they split from the US so we didn't have to deal with them anymore?
 
nilepez said:
I have no idea what your point is, but unless you have evidence that their economy is shrinking then it's got nothing to do with what I wrote.
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And THAT is my point. You don't understand you can't present the piece of information you did as you did and claim it is in any way valid other than as a divorced data point without context or analysis.
 
Commifornia? This isn't a surprise. Tax and spend, tax and spend...tax some more....spend some more ect. The politicians out there love spending everybody else's money and taxing everybody and everything to try and make up for their out of control spending. Welfare is expensive
 
nilepez said:
I have no idea what your point is, but unless you have evidence that their economy is shrinking then it's got nothing to do with what I wrote.
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The point is...California used to be the world's 4th largest Economy, now it is 6th.....California is going backwards.

Keep doing what you are doing! :joyful:
 
Paul_Johnson said:
What is even more interesting is that people from Colorado, Delaware, Georgia, Illinois, Kansas, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, New York, Ohio, Oklahoma, Utah, Wyoming, etc. (those states vary year to year and metric to metric) rarely complain about it. Sure some of them do (New York and New Jersey at times) but boy are people in California hung up on this simplistic and often inaccurate idea like they are special in this regard or something (they aren't). It is also not as simple as how much you pay versus how much you get back (also something that is lost on people in California who make this argument). A much more accurate and realistic assesment of how states fare in the union is more complicated. One example can be seen here https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/ Even then, California still isn't as important or as unique as it thinks it is.
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No idea if those other states speak up about it or not but so what? Even your link shows CA as the 5th least dependent.

Obviously I'm a bit biased since I am far prouder to call myself a Californian than an american but the fact that CA is a donor state is really not up for debate (and don't act like Texans don't feel the same way ;)).

Despotes said:
The Great California Exodus: A Closer Look
https://www.manhattan-institute.org/html/great-california-exodus-closer-look-5853.html
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California's population has been steadily increasing.

https://www.google.com/search?q=cal.....69i57j0l5.3850j0j7&sourceid=chrome&ie=UTF-8

Also, people are leaving because of high housing prices. It's not good to push people out (I agree) but the high housing prices are because of the high paying jobs here. You can't possibly beat up in California for having too many high paying jobs

https://www.trulia.com/blog/trends/why-do-people-leave-california/

The point is...California used to be the world's 4th largest Economy, now it is 6th.....California is going backwards.

Keep doing what you are doing! :joyful:
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California has 5 year GDP growth of 14%.

http://www.deptofnumbers.com/gdp/california/
 
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Shogon said:
I wonder the same, and I've been here in CA my entire life. You'd think our roads would be made of gold or something with the amount of taxes that are collected here. I'm wondering where that bullet train is, and where it goes to.
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Stolen by Jerry Brown to give handouts to his government employees, teachers unions and illegal immigrants. The latest is he stole the cigarette tax increase from Medical patients. ...and people here are stupid enough to keep voting to tax themselves and the state into ruin!
 
Paul_Johnson said:
And THAT is my point. You don't understand you can't present the piece of information you did as you did and claim it is in any way valid other than as a divorced data point without context or analysis.
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I understand that businesses aren't running away from CA in any meaningful way. I also know that GDP is GDP and last figures I saw had them at 6th. Not Texas. Not NY, Not Iowa and not France (unless something has changed). If businesses were fleeing, then their GDP would decline, as would their overall ranking, yet their population isn't falling and GDP is growing.
 
Fucking California. There is really nothing else to say about it at this point. Keep being idiots please . . . it's good for other states.
 
Megalith said:
The Golden State’s Franchise Tax Board has revealed that they would like to place an additional tax on launch companies who shoot off rockets in their territory. This tax would be based on mileage, which I assume means that costs would be calculated based on traveling distance. Unfortunately, the federal government already taxes commercial companies that include SpaceX and Virgin Orbit, so this may not make much sense.

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. Phil Larson, a former Obama White House official who now is assistant dean of the University of Colorado's College of Engineering and Applied Science, told Ars that California is discriminating against rocket companies by doubly taxing them.
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Federal Taxes != State Taxes

That said, California can screw itself. I swear people must sit around every week and say "Hey, what else can we tax that most people won't notice?" Not to mention, many of these expenses are funded by the government - so they would be exempt of any such taxes.
 
I'm no tax lawyer but this looks like a tax break, not a new tax.
 
Isn't this the exact opposite of what most states do? I would've guessed tax breaks, not additional taxes, to get/keep industries in your state.

Full disclosure: I read nothing more than a headline and the blurb.
 
Anyone wanting to make a point can spin numbers however they want to. Here's a look showing California getting $1.18 in federal money for every $1.00 they pay.... So, the whole $30 Billion extra arguement totally flies out the window.

Also, those 'federal $$' include money spent on the military, defense contractors, college grants, research, etc... It's not just what money is spent on SS / Medicaid / Welfare / Medicare / Other 'social programs. Having a few large military bases in your state makes you a large receiver of federal funds and has NOTHING to do with a particular state being a free-loader on the system.

https://www.mises.org/blog/which-states-rely-most-federal-spending
 
Old_Way said:
Having a few large military bases in your state makes you a large receiver of federal funds and has NOTHING to do with a particular state being a free-loader on the system.
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Considering how a State representatives will fight to keep bases active in their state, even when the military says they are un-needed, or how Congress will decide locations for military infrastructure and chunks of the defense budget can be spent poke holes in that idea and show that military bases in your state can well be part of a free loading system.
 
Old_Way said:
Anyone wanting to make a point can spin numbers however they want to. Here's a look showing California getting $1.18 in federal money for every $1.00 they pay.... So, the whole $30 Billion extra arguement totally flies out the window.

https://www.mises.org/blog/which-states-rely-most-federal-spending
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That's far too nihilistic of a viewpoint for me. Words (and numbers) have meaning and a thing is either true or it is not true.

I looked at that article and here's my best guess at what is going on but I'm totally open to being wrong about this. He says this is how he calculated net tax revenue from a state

To discover that, we need to compare federal spending to tax collections from each state. So, I took gross tax collection by state, and then subtracted refund totals. I then compared the "net" collections to Pew's total federal spending data in each state.
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Note that the links you need are https://www.irs.gov/uac/soi-tax-sta...y-type-of-tax-and-state-irs-data-book-table-5 and https://www.irs.gov/uac/soi-tax-sta...uding-interest-by-state-irs-data-book-table-8 since the ones in the article are broken.

I don't think it is legit to subtract those two numbers. I say this for a couple of reasons
1) This Politifact link gives the total CA tax paid as the nonsubtracted number (i.e. just the gross number http://www.politifact.com/california/article/2017/feb/14/does-california-give-more-it-gets-dc/). That's for 2014 but you can verify that it is the same as the gross number for that year using the corrected links I posted
2) Same story with this Wikipedia link https://en.wikipedia.org/wiki/Federal_tax_revenue_by_state though I only check 2012 on there
3) He writes "net" in quotes. That maybe is a small thing, but if he were really computing the net value of something in thee traditional sense then I don't think he put it in quotes.
4) If this "net" calculation were legit you'd think that the IRS would directly provide the already subtracted numbers

I'm going to reach out to the author to see if he can answer my questions and get to the bottom of this.

And I agree that just because the feds spend more in a state than they take in it doesn't make them leeches. The strategic value of Blue Hawaii far compensates for any costs associated with the state, for example. And I'll give Wyoming a pass since I wouldn't want everyone's nuclear weapons pointed at me :).
 
Jamison Collins said:
That's far too nihilistic of a viewpoint for me. Words (and numbers) have meaning and a thing is either true or it is not true.
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Back when I was in college I had a professor point out that numbers are all in how they're presented, regardless of the facts. Her example:

The US and Russia decided to have a horse race between their two best horses to see who was faster and the US horse won.

The US paper headline: US horse wins against Russians.

Russian headline: In an international horse competition, Russian horse comes in second and US horse comes in 2nd to last.
 
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