Lawmakers could hardly contain themselves earlier this year when they approved legislation granting a $1.1 million property tax break for SpaceX, the rocket company based in Hawthorne that billionaire Elon Musk founded.
The Senate approved it 32-2 and the Assembly approved it 70-2.
The Los Angeles Times quoted Assemblyman Al Muratsuchi, the Torrance Democrat who carried the bill, as calling private space exploration “one of the most exciting new industries in California.”
“Private companies like SpaceX are building rocket ships and creating thousands of good-paying manufacturing jobs right here in Southern California,” Muratsuchi declared.
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SpaceX maintains its headquarters in Hawthorne near Los Angeles and employs Californians to design and manufacture rockets, which ferry supplies to the International Space Station.
But earlier this week, it was Gov. Rick Perry of Texas – and not California politicians – crowing about Musk’s decision to locate SpaceX’s rocket launch facility in Brownsville, Texas, thanks in part to Perry’s $15 million incentives package
At first read, this might seem like another loss for California as it tries to reclaim lost aerospace jobs, and a win for Texas, whose governor seems to never miss a chance to insult California.
The addition of 300 SpaceX jobs can only help Brownsville, which, according to a 2013 article in the Houston Chronicle, was the poorest city in America. But the decision to use the Brownsville area as a rocket launch site has much more to do with physics than it does incentive packages.
Brownsville and Cameron County, Texas, sit at the southernmost tip of the central United States. As such, their location is closer to the equator, which is important so rockets can make better use of the earth’s rotation as they speed toward space.
The SpaceX announcement comes as California legislators, seeking to lay claim to helping provide jobs, are contemplating several tax incentives in the final weeks of the legislative session.
Hollywood productions and the aerospace industry stand to benefit, as does another Musk venture, a proposed $5 billion factory that would produce batteries for electric vehicles including Musk’s Tesla and his solar panel company, Solar City. Musk is deciding among five states, Texas and California among them.
California most definitely could use the 6,500 jobs Musk envisions at what he calls the gigafactory. But companies locate, relocate, lay off and hire for many reasons.
Allergan, the Southern California-based manufacturer of Botox, likely benefited from state tax policy that favors research and development. It’s in the process of laying off hundreds of workers, apparently as part of a strategy to fend off an unwanted takeover.
No doubt, tax breaks help sway executive decisions about where to locate a facility. People don’t become billionaires by turning up their noses at $15 million in tax breaks. But sometimes, companies build launchpads for reasons having to do less with taxes and more with physics.