Now someone wants to slap a SPACE Tax on Jeff Bezos, Elon Musk, et al

The recent suborbital flights by Richard Branson’s Virgin Galactic and Jeff Bezos’ Blue Origin were praised by some and condemned by others. Opinion seems to be divided between those who view these suborbital jaunts as the dawn of a commercial spaceflight era and those who think they’re the ego-driven exercises of billionaires who don’t pay enough taxes.

Democratic Rep. Earl Blumenauer (D-Ore.) wants to slap a tax on space tourism flights. He is calling his proposed bill the Securing Protections Against Carbon Emissions (SPACE) Tax Act. Blumenauer appears to be wrapping his desire to soak rich space travelers in the politics of climate change, the idea being that rocket exhaust consists of greenhouse gases. The tax would be much higher for orbital flights, such as those being mounted by SpaceX and Axiom Space. NASA flights would not be taxed. Flights that are a mix of commercial and science would be taxed on a “pro-rata share.”

The real motive for the SPACE Tax bill is rather transparent. Blumenauer and people who think as he does likely can’t make space tourism illegal, but they can make it more expensive than it already is. In effect, the proposed tax is a punitive measure to punish Bezos, Branson and Elon Musk for wanting to promote private space travel. Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) are always going on about rich guys like Bezos, Branson and Musk galivanting in space when they ought to fork over their wealth to the government. Blumenauer has devised a way to make the space billionaires pony up. An organization called Tax March has released a YouTube video pounding away on the meme of rich folks on space joyrides.

If, contrary to Blumenauer, we think that commercial space travel, even joy rides for the well-heeled and adventurous, are a good thing, slapping a tax on it would be the last thing we would undertake. Commercial space flight not only generates revenue and creates jobs here on Earth. It also saves money for NASA and the military by providing cheap access to space.

A better approach would be to do the exact opposite of what Blumenauer proposes. It is time to revive an old proposal, Zero Gravity, Zero Tax.

Zero Gravity, Zero Tax was a bill proposed in various forms for a number of years early this century. One version, advanced in 2008 by then-Rep. Dana Rohrabacher (D-Calif.), would have done the following:

“Amends the Internal Revenue Code to: (1) exclude from gross income space-related income from products or articles produced, or services provided, in or from outer space; (2) allow an investment tax credit for the purchase of stock in a space company that has average annual gross receipts not exceeding $100 million and that derives more than 70 percent of its gross receipts from space-based business; and (3) exclude from gross income gain from the sale or exchange of any stock of certain space corporations.”

The approach would not so much subsidize commercial space launches as help promote markets that they would serve. Commercial operations covered by the bill might include private space stations and lunar and asteroid mining facilities. The idea would be to make space itself an enterprise zone, like those proposed to help economically develop urban areas that have suffered a decline in essential businesses.

The Zero Gravity, Zero Tax bill never passed, and Rohrabacher lost his congressional seat in 2018. But that doesn’t mean that the concept is any less useful. Indeed, with commercial space becoming more of a reality, the time may be right to start enacting policies that will encourage the growth of a private space sector.

Whether one supports taxing commercial spaceflight or instead advocates shielding it from taxation depends on how one views the relationship between government and the private economy. If one favors slapping a tax on commercial space flight, one likely favors the primacy of government over the private sector. If one supports the Zero Gravity, Zero Tax approach, one more likely sees the role of government as supporting the growth of the private sector, if only by getting out of its way.

If Blumenauer seriously files his SPACE Tax bill, someone else in Congress should counter it with a new version of the Zero Gravity, Zero Tax Act. Let the two approaches fight it out in Congress and the court of public opinion and let the better one win.

Mark Whittington, who writes frequently about space and politics, has published a political study of space exploration entitled Why is It So Hard to Go Back to the Moon? as well as “The Moon, Mars and Beyond,” and, most recently, “Why is America Going Back to the Moon?” He blogs at Curmudgeons Corner.  He is published in the Wall Street Journal, Forbes, The Hill, USA Today, the LA Times and the Washington Post, among other venues.