Daily Tax Update - April 24, 2017: Trump, Mnuchin Discuss Tax Reform

Trump, Mnuchin Discuss Tax Reform:  Elaborating on remarks from April 21 regarding the timing of his administration’s tax reform proposals, President Trump, in an interview
yesterday with the Associated Press, stated that “around Wednesday of next week” his administration will be “putting out a massive tax reform – business and for people,” including “a massive tax cut.”

Also this past weekend, Treasury Secretary Steven Mnuchin was interviewed by Christine Lagarde, the managing director of the International Monetary Fund (IMF).  In answering a question about anticipated budget scoring of tax reform proposals, Secretary Mnuchin stated that “we are looking at reforms that will pay for themselves with growth . . . [U]nder dynamic scoring, this will pay for itself; under static scoring, there will be short-term issues.”

California Proposes Formula for Taxing Space Transport:  The California Franchise Tax Board (FTB) issued proposed regulations providing a formula for the apportionment of income from space transportation activities.  According to the FTB, the formula is intended to encourage existing space transportation companies to continue to do business in California and to expand as appropriate.  The proposed formula is weighted heavily by vehicle-miles traveled within and outside of California, with miles traveled in space effectively treated as traveled outside of California.

Under the proposed formula, 20% of the apportionment will be based on the launch location and 80% based on a “mileage factor,” calculated using the proportion of miles that launch vehicles are projected to travel within and outside of California.  For launches occurring in California, a vehicle is deemed to travel 62 miles in California, and for launches occurring outside of California, a vehicle is deemed to travel 0 miles in California.  Sixty-two miles is the height of the Kármán line, often regarded as the boundary between the Earth’s atmosphere and outer space.