Just to prove that California does things differently than other states, especially Texas, the Golden State’s Franchise Tax Board is considering slapping a tax on rocket launches. The way that the tax would work is that every rocket or other spacecraft that passes the internationally recognized edge of space, 62 miles above the surface of the Earth, would be taxed according to the miles it travels before releasing a payload at a 6.2% rate of the contract’s value. The more miles a rocket or spacecraft travels, the less the tax. If the launch company cannot disclose the number of miles a rocket travels, then that figure is assumed to be 310 miles for tax purposes. Whether a SpaceX Falcon 9 or a Virgin Galactic SpaceShipTwo will be charged for the return trip from space is yet to be determined.
If the rocket launch tax (or as some call it a “launch income regulation”) goes through — and this being California, one should not bet against it — the greatest beneficiaries would not be the state government in Sacramento, but rather Texas, among other states, which has a slightly different approach to the taxation of rocket launches.
When SpaceX was looking for a site for a private spaceport, state officials in Austin fell over themselves to offer that company tax and other incentives to locate in the Lone Star State. Elon Musk’s company is now developing that private spaceport near Brownsville with construction slated to be finished by the end of 2017 and the first launches to take place as early as 2018.
SpaceX also has a test facility near McGregor, Texas. Its corporate rival, Blue Origin, has been flying its suborbital rocket the New Shepard at its test range near Van Horn. Texas is also home to two spaceports for horizontal takeoff and landing vehicles such as the one being developed by Virgin Galactic at Midland and Ellington Field, south of Houston.
Commercial spaceflights that launch from California take off from Vandenberg Air Force Base. Launches from this facility are designed to deliver payloads into polar or sun-synchronous orbits. The SpaceX Brownsville spaceport would not be very well suited for such launches, but they could be moved to the Kodiak Launch Complex in Alaska to avoid the tax.
The real potential windfall where Texas is concerned is with horizontal takeoff and landing vehicles such as the one being developed by Virgin Galactic. California has a facility to handle such spacecraft at the Mojave Air and Space Port. Thus far, the only space-related activity, besides some vertically launched suborbital missions, that has taken place at that facility has been the tests Virgin Galactic has been conducting of its space tourism system. The company intends to operate its tourist flights out of a spaceport in New Mexico but is developing a business that would use SpaceShipTwo to launch small satellites out of Mojave. If California slaps a tax on such spaceflights, the company may be tempted to go to Texas instead. One would not be surprised if officials in Austin start dangling enticements for Virgin Galactic to do so. Of course other companies considering space tourism or other HTOL operations would consider Texas a better state, from a tax and business environment standpoint, to relocate to than California.
Companies like Virgin Galactic can run horizontal takeoff and landing spacecraft from Midland and Ellington just as easily as from Mojave. Texas will be glad to have the extra business that economic stimulus attracts from California.