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Rocketplane and the Oklahoma Tax Break

Posted by: Senior Von Braun - Sun Dec 26, 2004 1:44 am
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Rocketplane and the Oklahoma Tax Break 
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Space Walker
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Post Rocketplane and the Oklahoma Tax Break   Posted on: Sun Dec 26, 2004 1:44 am
A while back I read that Pioneer Rocketplane was getting back in business with the help of a $20 or $30 million (!) tax break (exemption, cut, something like that). At first I didn't think much of this, but they seem to be hiring engineers like mad and have updated their website and business plan for the first time in two years. My question is this: how on Earth does a tax cut let them start thier business? Are they being paid millions by the state of Oklahoma directly? If this is the case I don't see why more companies aren't relocating to Oklahoma to do business.

If anyone can offer some help in answering my questions I'd greatly appriciate it.

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Post    Posted on: Sun Dec 26, 2004 2:26 pm
Probably just simply the fact that lenders and/or investers are more likely to provide funding when they know it's going to expand the business instead of paying taxes. So a 20-30 million dollar tax break thus translates into real money for hiring engineers, etc.

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Post    Posted on: Mon Dec 27, 2004 12:40 pm
It seems to be a kind of subvention - which menas indirect governemental funding of R&D costs and other costs the company has to cover.

That's not the best evolutuion - the company has to be able to cover costs without subventions.



Dipl.-Volkswirt (bdvb) Augustin (Political Economist)


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Post    Posted on: Fri Dec 31, 2004 11:09 pm
Hmm, so Rocketplane doesn't actually recieve any money from Oklahoma? I suppose that makes sense, but at their website they really make it sound like they're just being handed millions of dollars outright from the government. I imagine that the difficulty of making rockets fly without blowing up is nothing compared to the difficulty of finding people to invest in your company, even if it's a capible one with good ideas. The firms that are fully-funded from the get-go like Armadillo, Blue Origin and Spacex are ridiculously lucky.

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Post    Posted on: Sat Jan 01, 2005 5:19 pm
The orginal amount of taxes they had to pay is taking a lot of money away from them - the tax break will leave a portion of that money to them which they now can use themselves.

This compares to getting money from the government but is not that obvious - it's called tax subvention.

May be the government is funding employment and growth and economic evolution of Oklahoma this way. This wouldn't hurt rules like that of the XPRIZE I suppose. But it's unsane and not right unless the tax subvention is terminated by an explicitly set date, by explicitly set conditions or Rocketplane has to pay it back once they have profits. The last should be included in all subventions.



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Post    Posted on: Sun Dec 11, 2005 6:22 am
They received about $18mil in tax credits. I found it very disappointing that the media hyped it up the way they did in order to look like tax payers money was being spent on 'dream chasing'; but that's how the media works.


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Post    Posted on: Wed Dec 14, 2005 8:16 pm
Tax breaks in this industry are worse than useless.

A tax break on space manufactured goods , for example, ranks on the same level as giving a tax break to anyone who lives to the age of 990. Real money has got to be had. A tax break may give you the illusion of progress, but an individual looking for some type of tax shelter only need hire one rocket enthusiast, put very little real money down for the project, and then run back off to his private island. If you try to put some tabs on the process, you get accused of 'nanny state' protection, and the politicos drone on and on about how regulation is bad, etc.

A politician who gives a tax break to space companies thinks he is helping, but really isn't.

TVA wasn't built that way--and that model won't work for spaceflight either.

Standard Economic models are also fine for established industries where the players are known, and some history can be found.

Spaceflight is much too plastic at this point.

Lets get the containerships built before we figure how much to charge.


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Post    Posted on: Wed Dec 14, 2005 8:27 pm
publiusr wrote:
Tax breaks in this industry are worse than useless.
I disagree. These small startups need all the money they can get. Rocketplane is not getting tax breaks for space manufacturing, they are getting them for building a suborbital tourism business that may well be up and running profitably before Virgin Galactic.

publiusr wrote:
TVA wasn't built that way--and that model won't work for spaceflight either.
Do you mean the Tennessee Valley Authority? I don't see the connection at all. :?:


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Post    Posted on: Wed Dec 14, 2005 10:04 pm
The point was that a project needs a goodly amount of taxpayer money coming in to it. Tax breaks are rather more limited in the good they do for large projects. Kistler was an example of how vulnerable space firms are to selfish investors with no vision or staying power.


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Post    Posted on: Wed Dec 14, 2005 10:29 pm
Unfortunately the taxpayers are not happy about so much of their money going to big aerospace projects. Not happy at all That is why I am pinning my hopes on starting over, in the private sector. And due to limited money we have to start small. But if the small startups like Rocketplane, SpaceX, Virgin Galactic and others can make real money, the industry could snowball into the kind of money you would need for heavy lift vehicles. All pushing for more tax money is likely to do is cause a backlash among the majority of taxpayers who, unlike us, are not strong supporters of space flight. And such a backlash could result in reduced spending, not more.


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Post    Posted on: Thu Dec 15, 2005 5:52 pm
I seem to remember some SPX survey with 60% percent in favor of a stronger NASA IIRC.


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Post    Posted on: Thu Dec 15, 2005 6:03 pm
I remember a recent space show where Dr. Livingston told of a time he was standing in line at the pharmacy. One of the other people in line said something about the government planning to spend billions going back to the moon and complaining that they money should go the their drug benefits instead. Every other person in line agreed. Dr. Livingston was afraid to speak up in favor of space because he was so outnumbered. Yes, I know this is an anecdote and not a survey. But it has the advantage of not having prompted the response with a carefully worded question.


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Post    Posted on: Thu Dec 15, 2005 9:28 pm
I wouldn't have kept quiet--but would have said something along the lines of "Well you won't mind if I shut off the GOES weathersats then would you. Too bad my tax dollars goes to the upkeep of fossils who would deny jobs to the folks who gave them weather warnings.

I'd love to turn off all the space assets for a day or so, myself.


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Post    Posted on: Thu Dec 15, 2005 10:04 pm
publiusr wrote:
Too bad my tax dollars goes to the upkeep of fossils who would deny jobs to the folks who gave them weather warnings.
If I were one of those people in line and you replied this way, I would take it as meaning, "please die so that I can take the money now keeping you alive and use it for my heavy lift rocket toys".

And if you asked what I would think of turning off all the satellites, I would say that none of them was launched with a heavy lift vehicle.

In short, you have given me no reason whatsoever to support your view.

If I was one of those people.

Which I'm not.

:wink:


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Post    Posted on: Fri Dec 16, 2005 12:06 am
Hmm. The irony of any such hypothetical conversation is that the Medicare budget alone in 2004 was nearly TWENTY (20) TIMES the size of NASA's. If you count in Social Security and Medicaid and other related programs, our great and benevolent nation has this year spent over one trillion dollars on those citizens in their golden years and/or otherwise needing medical and substantive income assistance.

http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0 (see table 9)

Compare that to the ~$15 billion spent on NASA and then decide for yourself whether anyone complaining about NASA's budget is sufficiently informed to be actually debating the topic. Had the good doctor in Pete's morality play been accompanied by a thousand of his closest associates, they would have been no more able to convince the antagonists in this story than he by himself was.


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