A tax on extraterrestrial travel?

Rocket
By Eleanor O'Neill, CA Today

22 May 2017

With the rocketing popularity of businesses focused on commercial space travel, it was only a matter of time before a system of tax was devised.

Regulators in California have proposed a tax plan that would allow the state to charge companies like SpaceX and United Launch Alliance (ULA) for the 62-mile distance between Vandenberg Air Force Base and the edge of the Earth's atmosphere.

Vandenberg, located north of Los Angeles, is one of the few orbital spaceports in the US and is the only location in California where satellites and other large launches are approved by the Federal Aviation Administration (FAA).

Current tax rules in the state require companies to calculate tax rates based on the location of the customer who benefits from their services. This new sector-targeting formula uses a similar structure to the system normally used for transport companies and sets a rate related to the number of trips taken.

The new rules have been well-received by the industry; SpaceX, ULA and Virgin Galactic are reportedly supporting the proposal.

As originally reported by Quartz, SpaceX CFO Bret Johnsen wrote in a letter to the California Franchise Tax Board: “Without the proposed regulation the standard apportionment rules are unclear as applied to space transportation companies. 

"The proposed regulation provides certainty for us, as well as other taxpayers in the industry, for our California franchise tax filings going forward.”

Topics

  • Tax
  • Technology
  • Business
  • North America

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