Satellite Tax Idea Is Back to Earth
State tax officials Tuesday shot down an attempt by the Los Angeles County assessor to collect taxes in outer space.
In a 5-0 vote, the State Board of Equalization approved a new rule that protects any artificial satellite permanently located in outer space from being taxed by a government in California.
The vote came as the result of an inquiry by Los Angeles County Assessor Rick Auerbach, who asked whether he could impose property taxes on eight satellites owned by El Segundo-based Hughes Electronics.
The satellites are valued at as much as $100 million each and could generate millions of dollars in annual revenue for government coffers. No such satellites have been assessed property tax in California before, according to the Board of Equalization.
Auerbach figured Los Angeles County could tax the satellites in part because no other government was doing so. The Board of Equalization’s legal staff agreed.
But the five-member board backed away from the staff opinion in a June 20 meeting, and on Tuesday in Culver City moved unanimously to bar taxes on out-of-this-world satellites.
The new rule will be the subject of a public hearing in September and could take effect within several months.
Auerbach said he will abide by the board’s vote and not assess the Hughes satellites--at least until after he studies the legal justification for the new rule.
“I’m going to wait and see,” said Auerbach. “If the rule reflects the Constitution, statutes and case law, then I’ll follow the rule. And if not, I’ll have to challenge that rule in court.”
Hughes officials argued to the board that their satellites are not comparable to other “movable” property, such as construction equipment and boats, that can be taxed by the city or county where the owner is based.
The satellites in question are launched from Florida or French Guyana and fixed in orbit 22,300 miles above the equator. They serve many functions, including beaming movies into homes. When the fuel that keeps them oriented toward Earth runs out, the satellites are forever retired to a designated space junkyard.
Hughes spokesman George Jamison welcomed the board’s vote, noting that property assessed for taxes usually gets some benefit--such as fire protection--in return.
“We would point out that the spacecraft in question are not in the state of California, have never been in California in their useful life and will never be in California.” he said. “These satellites never have and never will receive any benefits, any protections or any opportunities from the county of Los Angeles.”
