EDITORIAL: California policymakers are planning the taxes of the future

May 18--Government has been criticized for being slow to adapt to new technologies -- but not when it comes to taxing them, it seems.

And especially not in California, where the Franchise Tax Board is blasting off with a proposal to tax the fledgling private spaceflight industry. The tax would be the first of its kind at the state level.

Perhaps there is a good reason for that. Maybe other states do not want to bleed the industry dry before it can even get off the launch pad. Yet, incredibly, the FTB says its tax scheme, which would be determined by a formula based on the number of launches made from within the state and the distance traveled, would be a boon to the industry. By introducing a measure of certainty over tax treatment, the FTB says, its proposal "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."

Because more taxes -- not savings; investment; competitive markets; good, old-fashioned hard work and ingenuity; and the freedom to keep the fruits of one's labor -- is what is needed to "foster an atmosphere of growth and prosperity." And if companies have been holding back on their investments for fear of how much of their wealth the state will try to confiscate, that does not exactly speak well to the state's treatment of businesses -- in this industry or any other.

"Yes, taxes always foster growth and prosperity -- somewhere else where taxes are lower," quipped writer Ed Straker in a post for the American Thinker. "California state government spends all its time 24/7 thinking of new ways to tax people and businesses," he added. Sadly, that does, indeed, seem to be the case.

There is something to be said for eliminating uncertainty over government tax and regulatory policies, especially if it provides some assurance that in-state businesses will not be excessively taxed and out-of-state competitors using the same launch facilities in California will be subject to the same rules. But, given our policymakers' propensity to heap on more and more taxes and restrictions on businesses, this can hardly be a comforting thought.

And the eagerness to be the first to impose such a tax does not bode well for encouraging or attracting private space businesses, when they could operate without such a tax elsewhere.

"States that don't levy taxes would have that competitive advantage over states that do," John Logsdon, professor emeritus and co-founder of the Space Policy Institute at George Washington University, told the San Francisco Chronicle. "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."

We have seen the future, and the future is more taxes. In other words, it is more of the same for California. The state prides itself on the presence of innovative companies, especially in Silicon Valley, but if it wants a brighter economic future, it should learn to take a more hands-off approach, whether it is the treatment of exciting new ventures whisking goods and people into space or the more terrestrial and mundane pursuits of other businesses that provide economic opportunities for workers and needed goods and services for consumers in California and across the globe.

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