When Jerry Brown was governor of California the last time around, he received the moniker “Governor Moonbeam,” in part because he proposed that the state start its own space program back in 1978. Now he’s back, with regulations that would tax space launch companies.
More accurately, the regulations specify how much of the income earned by a space-launching company should be considered to have been earned in California. The state could legitimately say, “Launch in California, earn in California” and be done with it. But they are instead doing something clever. (And, in effect, a tax break for SpaceX.)
First, multiply income by a mileage factor. For California launches, the numerator of the mileage factor will be 62 miles. That is, all launches within the state will be considered to travel 62 statutory miles before leaving the jurisdiction of California, regardless of where they actually launch from. The denominator will be the distance traveled by the time of final payload separation. That is, the company will considered to be selling travel to Low Earth Orbit (more or less) with the portion of that travel within the state of California being taxable.
The formula gets a little more complicated than that, but not much. For those of you who want to know, the mileage ratio is multiplied by 0.8. Then the ratio of all launches from California to all launches by the company is multiplied by 0.2. Those two things are added together, and then total revenue is multiplied by that to determine gross taxable revenue.
Anyway, it is simple, clever, and a big giant tax cut for California-based launch companies. Go figure! The Hoover institution would approve.
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