California's Franchise Tax board announced last summer that it would be slapping a tax on space launch companies operating in the Golden State, to be calculated by a complicated formula taking into account miles traveled through space and frequency of launch.
Industry and political leaders in Texas, a state with a polar opposite governing philosophy to that of California, were particularly amused. The idea of taxing space travel sounded like just the sort of joke that Texans might tell about how things are done in Blue-state California, as one Texas journalist put it to me during an interview. But the rocket tax is no joke.
Some glimmer of sanity has since arisen in the California state assembly, in the form of a proposed bill, AB1874, offered by State Assemblyman Tom Lackey, R-Palmdale, according to the San Francisco Chronicle.This bill would repeal the application of the transportation tax to space launches, and exempt all commercial space launch income from state taxes.
The legislation makes sense. States like Texas and Florida have enacted tax incentives to attract all kinds of businesses, including commercial space companies. California cannot afford to start losing rocket launch companies as a result of its draconian tax policies.
On the other hand, the tax board claims that its tax formula will actually attract commercial space businesses to California. The theory is that the regulation will provide an aspect of certainty that would otherwise not exist. In support of this view, the more established aerospace companies such as SpaceX and ULA seem prepared to accept the new tax formula, at least for the time being.
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01.23.2025