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[MJPIA]

The details are flying a bit over my head currently but anyone else interested in space and rocket launches may be interested in this.
http://www.sfchronicle.com/business/article/California-plans-for-collecting-taxes-on-11119631.php

The state's Franchise Tax Board is seeking public comment on its proposal for computing taxes on commercial space transportation companies.

The private spaceflight industry remains small, despite grand ambitions to shuttle everything from tourists to 3-D printers into space. But the board says it created the rules to give entrepreneurs the confidence that once their businesses really start to take off, California's tax code will be ready to handle them.

The rules are designed to apply to any company operating in California that generates at least half the money it takes in from ”space transportation" — defined as the movement of people or property 62 miles above the surface of the Earth. That's the internationally recognized line that separates our planet from the rest of space. It would apply to companies that use California as a launchpad, not California companies launching from other states, like Texas or Florida.

Thomas Lo Grossman, a tax attorney at the Franchise Tax Board, said the proposed rules are designed to mirror the ways taxes are levied on terrestrial transportation and logistics firms operating in California, like trucking or train companies. Those rules are based largely on the way California and other states calculate taxes when goods are shipped from one state to another.

In what's known as a market-based approach, companies tally sales — and then the taxes based on those sales — in the state where the good or service is received. But in the borderlessness of space, precisely where a product gets delivered is difficult to define.

According to the proposal, California will collect tax from space transportation companies based on a formula factoring in how often a company launches spacecrafts out of the state, and, most importantly, how far a commercial spacecraft travels from California soil. Between May and mid-October, there were eight launches from Vandenberg Air Force Base, in Santa Barbara County about 50 miles south of San Luis Obispo.

In short, the amount of tax on commercial spaceflight companies will decrease the farther the spacecraft travels from California. ”More mileage will mean less tax, and less mileage will mean more tax," Grossman said.

The Franchise Tax Board says it received input from the private space companies on the proposed rules, which largely resemble a draft submitted by SpaceX, perhaps the industry's most recognizable company. SpaceX, which is headquartered in Hawthorne (Los Angeles County), declined to comment.

The federal government already has its own system for taxing commercial spaceflight companies, Grossman said, but California was the only state he was aware of working to create a framework for taxing commercial spaceflight.

”States that don't levy taxes would have that competitive advantage over states that do," Logsdon said. ”If California puts in a tax and Florida or Texas doesn't have a similar tax, I'm not sure that helps California in a competitive way."

The Franchise Tax Board proposal said certainty about tax treatment ”will lead to increased activity in the industry and will foster an atmosphere of growth and prosperity once present during the golden age of California's aviation industry, thereby creating jobs as the industry thrives in this state."

California's Franchise Tax Board is accepting comments on the proposed rules until June 5. The rules will be up for adoption at a public hearing on June 16.

Draft text here
https://www.ftb.ca.gov/law/regs/25137-15/06162017-draft-text-for-Notice.pdf

(1) In general. The sales factor of space transportation companies shall be determined in
accordance with Revenue and Taxation Code sections 25134 to 25137, inclusive, and the regulations
thereunder, except as modified by this regulation.
(2) Sales factor numerator. In determining the numerator of the sales factor of a space
transportation company, gross receipts shall be attributed to this state based upon a mileage factor,
weighted at 80 percent, and a departure factor, weighted at 20 percent.
(3) Computation of the mileage and departure factors.
(A) Mileage factor. The mileage factor shall be determined by computing the mileage ratio
applicable to each launch contract for which the taxpayer recognizes revenue in the taxable year.

1. Mileage ratio numerator. The numerator of the mileage ratio for each launch contract shall be
the total projected mileage that all launch vehicles launched or planned to be launched pursuant to that
launch contract will travel within this state. If a launch occurs or is planned to occur in this state, the
contribution of that launch to the numerator of the mileage ratio shall be 62 statutory miles. If a launch
occurs or is planned to occur outside of this state, the contribution of that launch to the numerator of
the mileage ratio shall be zero.
2. Mileage ratio denominator. The denominator of the mileage ratio for each launch contract shall
be the total mileage that all launch vehicles launched pursuant to that contract are projected at the time
of the execution of the contract to travel from launch to separation.
3. If the Internal Revenue Service or the Franchise Tax Board is prevented by reasons of secrecy or
confidentiality imposed by governmental authorities from determining the projected mileage of any
launch contract, the mileage ratio denominator of such contracts shall be conclusively presumed to be
310 statutory miles multiplied by the number of launches pursuant to that contract.
4. Mileage factor numerator. For each launch contract under which revenue is recognized in a
taxable year, the mileage ratio for that contract shall be multiplied by the revenue recognized from that
contract in the taxable year. The product shall be added to the products for each launch contract for
which the taxpayer recognizes revenue in the taxable year the sum of which shall be the numerator of
the mileage factor.
5. Mileage factor denominator. The total revenue recognized from all launch contracts during the
taxable year shall be the denominator of the mileage factor.
(B) Departure factor.
1. Departure factor numerator. For each launch contract under which the taxpayer recognizes
revenue in a taxable year, the contribution to the numerator of the departure factor shall be the
number of launches in this state as specified in the contract at the time of execution of the contract. The
numerator of the departure factor shall include all launches in this state specified in the contract
regardless of the taxable year in which the launches occur or are planned to occur. The numerator of
the departure factor shall be the sum of the contributions to the numerator factor for all launch
contracts under which the taxpayer recognizes revenue.
2. Departure factor denominator. For each launch contract under which the taxpayer recognizes
revenue in a taxable year, the contribution to the denominator of the departure factor shall be the
number of launches everywhere as specified in the contract at the time of execution of the contract. The
denominator of the departure factor shall include all launches specified in the contract regardless of the
taxable year in which the launches occur or are planned to occur. The denominator of the departure
factor shall be the sum of the contributions to the departure factor for all launch contracts under which
the taxpayer recognizes revenue.

(d) Records. The taxpayer shall maintain all books and records necessary to determine the mileage
factor, departure factor, and revenue recognized in the taxable year pursuant to all launch contracts for
such time as any statute of limitation remains open for examination of the taxpayer's return.
(e) Example.
Taxpayer is a space transportation company that has entered into three launch contracts that result in
the recognition of revenue in taxable year 201X. The first contract ("Contract A") is for two launches
outside this state where the launch vehicles will each travel 1,000 miles from launch to separation.
Taxpayer will recognize $2,000,000 of revenue in taxable year 201X from this contract. The second
contract ("Contract B") is for one launch from outside of this state where the launch vehicle will travel
10,000 miles from launch to separation. Taxpayer will recognize $500,000 of revenue in taxable year
201X from this contract. The third contract ("Contract C") is for one launch from within this state where
the launch vehicle will travel 1,000 miles from launch to separation. Taxpayer will recognize $1,000,000
of revenue in taxable year 201X from this contract. Taxpayer also has $500,000 of revenue from other
than space transportation activities. The taxpayer's sales factor numerator from launch-related revenue
in the taxable year shall be determined as follows:

Contract A
Gross receipts recognized
in 201X
$2,000,000
Mileage ratio for each
contract
(0+0)/(1,000+1,000)=0
Contribution to mileage
factor numerator from
each contract
$2,000,000 x 0
= $0

Contract B
Gross receipts recognized
in 201X
$500,000
Mileage ratio for each
contract
0/10,000 = 0
Contribution to mileage
factor numerator from
each contract
$500,000 x 0=0

Contract C
Gross receipts recognized
in 201X
$1,000,000
Mileage ratio for each
contract
62/1,000 = 6.2%
Contribution to mileage
factor numerator from
each contract
$1,000,000 x .062
= $62,000

Mileage factor numerator $0 + $0 + $62,000 = $62,000
Mileage factor denominator (total launch
contract revenues recognized in taxable year) $2,000,000 + $500,000 + $1,000,000 = $3,500,000
Mileage factor ($62,000 ÷ $3,500,000) = 1.7714%
Departure factor for all contracts in the taxable year 1 launch from this state ÷ 4 launches everywhere = 1/4=
25%
Sales factor: Mileage factor weighted 80% plus departure factor weighted 20%
(1.7714% x 80%) + (25% x 20%) = 6.42%

Gross receipts to be included in sales factor
numerator in the taxable year multiplied by
taxpayer total gross receipts
.0642 x $4,000,000 = $256,800

Did a search and saw nothing, tax if old.

 

[SigmasonicX]

The thread title sounded odd, but this makes a lot of sense.

 

[Yayate]

I read the thread title as 'rocket launchers' and I was like 'holy shit' and then I reread the title and I got a little sad.

But honestly this all sounds like it makes a lot of sense.

 

[Escape Goat]

I read the thread title as 'rocket launchers' and I was like 'holy shit' and then I reread the title and I got a little sad.

I did too.

 

[Ether_Snake]

Doesn't make much sense if it isn't to pay for related infrastructure or if it's some sort of pollution tax.

 

[Kayhan]

Rocket launchers?!

 

[Grizzle_Dat]

Seems like Florida and Texas may be getting more business soon.

 

[Brandon F]

Rocket launchers?!

 

[Jezbollah]

Hmm. Seems like California has a high opinion of VAFB's position as a polar orbit launch option. I'm sure SpaceX and ULA will happily give up their leases and go elsewhere if this comes into effect.

Seems like Florida and Texas may be getting more business soon.

I'd suggest most likely Wallops Island, Virginia.

 

[Platinumstorm]

I could only see a pollution tax or fee for infrastructure damaged in a crash. This seems like ridiculous legislation, just like making cows wears balloons.

 

[numble]

Doesn't make much sense if it isn't to pay for related infrastructure or if it's some sort of pollution tax.

Its just an allocation of business profit. If you pay a company to ship an item from California to Nevada, both California and Nevada will say that some of that company's profit is attributable to their state, and they need to use a method of determining that allocation--what amount is attributable to California and what amount is attributable to Nevada. Here, the same principle applies, except it is to allocate between California and space.

 

[MJPIA]

Hmm maybe I should've worded the title slightly differently to avoid confusion.
Given I kept misreading that one thread title about Humpback whales protecting gray whales from orca attacks as Humpback whales protecting gay whales from orca attacks I probably should've figured something like this would happen as well.
Now I'm misreading it as rocket launchers as well.

 

[numble]

Hmm. Seems like California has a high opinion of VAFB's position as a polar orbit launch option. I'm sure SpaceX and ULA will happily give up their leases and go elsewhere if this comes into effect.

These rules are based on a SpaceX draft proposal.

 

[pa22word]

Texas:

 

[Tecnniqe]

Figured it was talk about the rocket launchers, as in bazooka style ones.

Am disappointed.

 

[bsp]

Well the Falcon's can land right where they take off so you could make a case for 0 miles traveled..

 

[A-V-B]

Arnie blows up a bad guy weapons facility

"Enjoy your new tax cut."

 

[numble]

Hmm. Seems like California has a high opinion of VAFB's position as a polar orbit launch option. I'm sure SpaceX and ULA will happily give up their leases and go elsewhere if this comes into effect.



I'd suggest most likely Wallops Island, Virginia.

SpaceX is headquartered in California. Absent this proposal, a launch from California would probably be all considered California-sourced income. This rule would lead to a large proportion of the revenue received from a California launch to be considered not sourced in California. Probably why SpaceX proposed such a rule.