Not everyone is suffering from California’s tax burden.
Elon Musk has successfully won subsidies and special tax privileges for his electric car company, Tesla Motors, and green energy company Solar City. Now he is asking lawmakers in Sacramento to exempt his venture SpaceX from California’s personal property tax, The Wall Street Journal reports.
The proposed legislation, which would clear Musk’s company and other space-travel companies from the fee, is necessary because “tax liabilities represent a devastating cost for this important California industry,” according to SpaceX.
Musk’s plea to lawmakers comes after a hefty $2 million tax bill was levied on SpaceX last year by the Los Angeles County Assessor for two propulsion systems.
Unlike taxes on homes and commercial real estate, personal property taxes have no limits in California, which makes them especially burdensome.
Musk rejected the county’s property tax assessment, arguing that the propulsion systems were only used once. Typically, when someone objects to the government’s estimate, they must file an appeal with a county clerk and wait to be scheduled for an administration hearing.
However, Musk decided to skip the line and use his lobbying power to petition lawmakers to give the commercial space industry a tax break.
Legally, the California Constitution allows items to be exempt from the personal property tax if the exemption is approved by a two-thirds vote in the legislature. But typically, this has just been awarded to things like household items and pets.
Despite the unconventional demand, Musk’s tax loophole has a fighting chance of becoming implemented. The bill has already made it through both of the state’s chambers, but now the Senate’s amendments to the legislation must be approved by the Assembly.
Some worry that SpaceX’s tax-exempt status would lead to a hierarchical tax system: ”The creation of two property tax systems, one for the small business owner or homeowner, and another for those major corporations who can afford to lobby their legislator,” noted the Santa Clara County Assessor.
If the bill passes, this will not be the first time the serial entrepreneur has received special treatment from the California legislature.
Drivers of one of Musk’s luxury Tesla’s already get at least a $2,500 rebate for purchasing the electric vehicles — as well as other perks, including access to carpool lanes. The car company also made $129.8 million last year by selling zero-emission-vehicle credits to other automakers, as part of California’s zero-emissions-vehicle program.
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