Sen. Bill Nelson, D-Fla., has proposed a set of tax breaks to encourage investment in the commercial space industry as a way to cushion the blow from recent cutbacks in the space program. Nelson has long had an interest in the space industry, and not only because Cape Canaveral and its Kennedy Space Center happen to be in his home state. Back in 1986 Nelson became only the second sitting member of Congress to orbit in space as a payload specialist aboard the Space Shuttle Columbia. (Pioneering astronaut Sen. John Glenn, D-Ohio, was the oldest lawmaker to orbit in space when at 77 he went for a final spin in the space shuttle in 1998, just a few months before he retired from the Senate.)
No doubt many Americans would like to see their congressional representatives spend more time orbiting outer space. But Nelson has legitimate reasons for trying to encourage investment in the space program. President Obama provoked a fair amount of controversy earlier this year when he suggested that a return trip to the moon was perhaps not the best use of taxpayer dollars in the wake of the economic crisis.
Instead, Obama suggested that the federal government should encourage development of the commercial space industry as a way to deliver astronauts to the international space station and eventually to Mars, while hitching a ride with the Russians if necessary to make any necessary repairs to the Hubble telescope or the space station. As for the moon, the general attitude seemed to be, “Been there, done that.” The only question seemed to be how to spur investment in the aerospace industry and keep NASA employees from having to finish their careers slinging hamburgers. The Kennedy Space Center is expected to lose 8,000 to 9,000 jobs once the space shuttle is mothballed after another two or three more flights, and jobs in Texas and Alabama will also vanish into thin air.
Nelson’s bill, known as the Commercial Space Jobs and Investment Act of 2010, would amend the Tax Code to encourage investment in commercial space flight facilities and equipment, research and job training, and other purposes. The bill would create up to five regional business enterprise zones around the country as “magnets” for commercial space ventures, which in turn would attract jobs to areas where there are lots of scientists and engineers.
Specifically, the bill would allow space-related businesses — situated around places like the Kennedy Space Center — to qualify for major tax breaks and other incentives. Investors would be able to write off 20 percent of their investments in commercial space companies that operate in the five regional business enterprise zones.Other provisions include a Commercial Space Research Credit of 30 percent and a special depreciation allowance for commercial space property equal to 50 percent of the adjusted basis of the qualified commercial space property. Now all we need is a special mortgage deduction for property purchased on Jupiter.
“President Kennedy was right when he predicted that space exploration would create a great number of new companies and strengthen our economy,” Nelson said in a statement. “What we’re doing now is everything we can to ensure KSC’s [not KFC’s] continued importance to our nation’s space exploration effort, while also broadening the economic opportunities along our Space Coast.”
Earlier this month, the Senate unanimously passed another bill from Nelson that would provide enough money for another space shuttle flight next year, in order to jump-start NASA’s new heavy-lift rocket design, and help develop the commercial rocket industry, aimed at saving the jobs of thousands of displaced shuttle workers. Comparable legislation has been introduced in the House. The new proposal to give tax breaks to commercial space entrepreneurs is already drawing support from the aerospace industry, including Space Florida, a state-backed organization that promotes the development of commercial rocketry and related undertakings.
(Note to Sir Richard Branson: you may want to apply now for a tax break for your Virgin Galactic spaceship Enterprise.) Keeping the space program going is certainly an important initiative and one of those issues that seem to matter to the country’s sense of national self-esteem. However, the idea of doling out tax breaks as a way to spur investment in space exploration seems a little dubious considering how much money is going to be handed out by NASA to commercial space entrepreneurs.
On the other hand, if it helps preserve jobs in an important industry like aerospace and helps build a nascent industry like commercial space flight, it’s not really a bad idea. The Obama administration has already pledged $40 million to Florida’s Space Coast to help ease the transition in the space program and has proposed an additional $60 million for other parts of the country that would be affected by the changes in the program, according to the Associated Press.
Commerce Secretary Gary Locke and NASA administrator Charlie Bolden recommended in a report this week that $35 million should be spent on commercial grants in Florida and $5 million on staffing a Commercial Spaceflight Technical Center at the Kennedy Space Center, according to Reuters.With that kind of money in play, in addition to Senator Nelson’s proposed tax breaks, the money saved on NASA’s space program may well be dwarfed by the amount spent on encouraging the commercial space industry to earn its wings and rocket boosters.
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