Mousetrap taxes

It’s only a matter of time

Laurence Peter, who came up with the Peter Principle, once said if you build a better mousetrap, the government will soon come up with a better mousetrap tax. He wasn’t kidding.

Now that the sky is no longer the limit, and commercial space companies are going to the International Space Station and parking satellites for our pay-radio devices and to make the Internet easier to get, the government sees potential benefit. And wants to tax stuff. Like space-flight stuff.

It may seem like something that’s not only unwarranted, but negligible. (How many space flights are going up every month?) But the industry has been taking off, in more ways than one, and will very likely grow in the coming years.

It’s caught the attention of the Biden administration. You knew it would.

At issue is the fact that the same services—like air traffic security and control—are used in managing your air travel to Dallas as are used in launching for-profit commercial space missions. Yet the space companies don’t pay taxes to support the services like airlines (and you) do.

When airlines pay your taxes and fees to the government, the money goes into the Airport and Airway Trust Fund, which pays for the Federal Aviation Administration’s work, and is set to receive about $18 billion in tax revenue for the current fiscal year, according to The New York Times.

“Whenever SpaceX launches a flight, it requires massive air traffic control resources to clear the airspace for hours around the launch window,” said David Grizzle, former COO at Air Traffic Organization, an agency within the FAA that hires the controllers. “And again, it pays zero.”

The FAA also has to create a detailed plan outlining the exact airspace to close and efficiently reroute planes before a launch. Controllers must respond quickly if anything unplanned occurs.

The commercial space companies do not pay for or share in any of the costs that everyone else must pay.

The argument against subjecting the commercial space industry to the tax is “now is not the time,” because the industry is struggling to make a profit in its nascency, and the amount collected would not amount to enough to matter anyway.

However, some see it as being about more than government revenue.

“This is a question of fundamental fairness,” said William J. McGee, a former FAA-licensed aircraft dispatcher and a senior fellow at the American Economic Liberties Project. “It would be the equivalent of having a toll system on a highway and waving through certain users and not others.”

Yes, that’s the equivalent. And it may make sense at times to do just that. Such as in the case of commercial space flights in 2024.

We are reminded of something called the Internet. When it was first catching on, certain government types wanted to tax that sucker. This Internet thing was taking off! Look at all that revenue! This baby—it was in its infancy—would become a monster! So let’s build that better mousetrap tax.

Some of us, however, thought it would be better to let the Internet grow for a few years, and expand, and bury its roots deep enough before the government jumped on it with taxes and fees. And now that the Internet is grown into that monster, it can certainly handle a little government. Or even, in some cases, a lot of government.

Space flight is going to be a monster. But if most space flight companies are still struggling to make a profit, it’s not there yet.

The industry, which has already launched 30 missions this year, is on pace to break last year’s record.

We’ll probably see the industry break its own record every year for the foreseeable future. It won’t be long until the space flight industry can handle multiple flights per week.

And then it will be able to handle multiple mousetrap taxes.