California offers tax break jackpot for space companies; New Mexico wants better use of spaceport tax

California has lagged other states in enacting measures to support commercial space companies, but is now working hard to catch up. On Wednesday, the California Assembly passed AB 777 on a 69-5 vote. The bill would grant an exemption to property taxes for equipment “that has, or upon manufacture, assembly, or installation has, space flight capacity” of various forms, as well as property that would be flown on such vehicles, as well as fuels “used exclusively” for spaceflight. The tax exemption would remain in place until July 2024.

While the bill benefits any firm that has “a primary business purpose in space flight activities,” the company that triggered the legislation is SpaceX, after it received a property tax bill from Los Angeles County, Reuters reports. The bill was introduced by Assemblyman Al Muratsuchi (D), whose Southern California is near, but does not include, SpaceX’s headquarters and primary manufacturing facility in Hawthorne. The California State Association of Counties opposed the bill since they will lose out on an estimated $1.1 million a year in tax revenue should this become law.

AB 777 isn’t the only space-based legislation California’s legislature took up this week. On Monday, the Senate unanimously passed SB 415, which clarifies that an “informed consent” waiver provision for commercial human spaceflight is not “contrary to the public policy of this state.” That bill was introduced by Sen. Steve Knight (R), a vocal proponent of the state’s commercial space industry who has expressed an interest in running for the US House seat held by the retiring Rep. Buck McKeon (R-CA).

While California looks to give tax breaks to space companies there, one New Mexico legislator is seeking to better spend tax money being collected for that state’s commercial spaceport. New Mexico Sen. Lee Cotter (R) introduced this week SB 172, a bill that would require local sales taxes earmarked for Spaceport America be spent solely on paying off bonds for building it. Cotter recently expressed concern that the New Mexico Spaceport Authority was using the sales tax revenue to pay for spaceport operations, which he considers to go against the intent of voters in two southern New Mexico counties who voted for the tax in 2007 and 2008.

Spaceport officials say the tax revenue is needed to cover operations at a key time for the spaceport, whose major facilities are essentially complete but whose anchor tenant, Virgin Galactic, has not started operations here. “This money is really critical,” Christine Anderson, executive director of the New Mexico Spaceport Authority, told the Las Cruces (N.M.) Sun-News. “It’s really protecting the investment of the taxpayers because if we don’t have that, we may have to close the spaceport.”

12 comments to California offers tax break jackpot for space companies; New Mexico wants better use of spaceport tax

  • amightywind

    This country would be a lot better off if states had consistent tax codes that did not favor one business over another. The pattern is familiar. Large companies extract huge tax concessions when they expand, leaving small businesses holding the bag. The practice is profoundly corrupt. Sounds like space is now a ‘winner’ in the liberal mind of the California politician. It would be much better for the economy if we had broad based tax reform.

    • Coastal Ron

      amightywind said:

      This country would be a lot better off if states had consistent tax codes that did not favor one business over another.

      Don’t you like what Governor Perry is doing in Texas? Gosh, Texas is giving away TONS of tax breaks to woo businesses to Texas, including $10M to XCOR so they would move their headquarters and R&D activities to Texas. Apparently people will only move to Texas if they are bribed. Of course there won’t be much of a Texas to support the businesses soon, since Governor Perry has slashed education spending, and he doesn’t want people to have healthcare there.

      But hey, the way the United States of America was set up the states are allowed to experiment with how things should be done. Like in West Virginia, where they did an experiment to see if a lack of chemical regulation would lead to better water quality. Of course that experiment failed, but you never know until you try, right?

      But if you think the Federal Government should be in control of enforcing consistent tax codes on every state, I’d say you’re not going to be welcome in your local GOP or Tea parties. They are kind of funny about issues like that… ;-)

      • Vladislaw

        Windy used to champion ole’ Rick “gravel road” Perry and the texas miracle. I agree that the states were intended as the test beds and create competition among the states is always done at the federal level to see which one comes up with the best solution.

        There was an interesting article, Up in Arms, from the Tufts’s University website:

        “The original North American colonies were settled by people from distinct regions of the British Isles—and from France, the Netherlands, and Spain—each with its own religious, political, and ethnographic traits. For generations, these Euro-American cultures developed in isolation from one another, consolidating their cherished religious and political principles and fundamental values, and expanding across the eastern half of the continent in nearly exclusive settlement bands. Throughout the colonial period and the Early Republic, they saw themselves as competitors—for land, capital, and other settlers”

        The Author puts forward that there are actually eleven Americas based on the region the people who settled there were from. A very interesting read but also goes a long way in understanding why some states have different laws, including tax laws.

      • The problem with West Virginia was not a lack of regulation, but a lack of enforcement of the regulation. A lot of jobs and people are moving from California to Texas, not so much because Texas is bribing businesses but because, unlike California, it isn’t actively punishing them.

        • Bennett In Vermont

          To your first point, it seems the Governor of WV and his minions feel that ignoring federal warnings about lax oversight is good for business. As to your second point, I’m in total agreement.

  • The Author puts forward that there are actually eleven Americas based on the region the people who settled there were from.

    In terms of the Anglosphere origins, there are four main strains: Puritans, Quakers, Cavaliers, and Scots Irish. David Hackett Fischer chronicles this in great detail in Albion’s Seed.

    • Vladislaw

      Thanks for the heads up on Albion’s Seed, am comparing some of the regions the two authors have in common, see if they agree… they are both the same on Appalachia.

  • Andrew Swallow

    Trying to level a property tax on something outside the state was definitely ‘trying it on’. California’s civil servants did not get away with it. LEO is not in California (and the rockets were launched from Florida).

    • Coastal Ron

      Andrew Swallow said:

      LEO is not in California (and the rockets were launched from Florida).

      SpaceX builds in California, and the tax being discussed was the property tax on their buildings. Try to keep up.

      • Andrew Swallow

        I am keeping up. The news article referenced says:

        Muratsuchi said he submitted his measure after Los Angeles County presented Space Exploration Technologies, or SpaceX, with a property tax bill on rockets and other equipment.

        The politician is claiming that the tax is on the rockets. Rockets are not buildings. I do not know how reliable his statements are but they do suggest something is very wrong.

  • Michael Kent

    “That sounds a bit odd.

    This sounds like it’s a personal property tax instead of real estate tax.

    Some states tax personal property such as cars, boats, trailers, planes, and RVs as property, with an annual assessment based on the value of the property, just like real estate. In many cases, agricultural property such as crops and livestock is included, not just the trucks, tractors, and combines. For businesses, most “business equipment” is included, such as computers, mills, etc.

    This bill sounds like it will exempt the rockets, engines, and assorted components from this assessment.

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