L.A. May Be Shot Down in Bid to Tax Satellites
By Dan Whitcomb
LOS ANGELES (Reuters) - Los Angeles officials seeking to impose property
taxes on space satellites were brought back down to Earth on Tuesday when
a state board moved toward declaring satellites beyond the reach of even
the tax collector.
But Los Angeles County Assessor Rick Auerbach said he was not yet ready to
scrap the proposed tax and would consider a court challenge if he finds
that the California State Board of Equalization has circumvented state or
It was Auerbach who determined that eight communications satellites owned
by Hughes Electronics Corp.(NYSE:GMH - news) and currently in
geostationary orbit 22,300 miles over Earth's equator were taxable as
movable property that was currently out of state, similar to construction
That decision prompted county officials to consider an assessment on the
communications satellites, which are each worth up to $100 million new.
But State Board of Equalization members appeared to short circuit that
plan on Tuesday when they voted 5-0 to ``fast track'' a rule that
satellites cannot be taxed, even though Hughes, a unit of GM (NYSE:GM -
news), is based in Los Angeles.
The decision came after presentations by Hughes and Auerbach and directs
the board's staff to draft a rule declaring the satellites nontaxable.
Board members would vote on that proposed rule in the coming months.
George Jamison, a Hughes vice president, said the firm was relieved and
pleased by what he called the ``good common sense'' of the board and said
they considered the proposed tax a very bad idea from the start.
HUGHES: TAX IS 'LUDICROUS'
``It's ludicrous, absolutely,'' Jamison said. ``It's the type of issue,
quite frankly, that causes the company to consider relocating its base of
operations to a more business-friendly environment.''
The satellites are not launched from California, do not pass over
California while in orbit and will never return to the state, instead
becoming space junk, he said.
``We think the ruling is important,'' Jamison said. ``These spacecraft are
not be in the state of California, have never been in the state of
California during their useful lives and will never be in the state of
California in the future.''
Auerbach conceded that the board members ``have made up their mind already
that the property is not taxable,'' but said the issue was not necessarily
dead because he had researched the case and found legal opinions
supporting his position.
``I'll have to see what basis they have for the rule,'' Auerbach said.
``If I believe it's improper (under the) U.S. Constitution and and state
statutes my option is to go to Superior Court.''
``I have to keep an open mind,'' Auerbach said. ``Based on the opinions I
have I think it still looks taxable.''
Auerbach insisted that he was not pushing for a tax on the satellites but
was simply doing his job and trying to determine whether they should be
``I'm neutral on the whole thing,'' he said. ``My job is to make sure all
property that's taxable gets assessed and I'm going to follow the law. If
the law says its not taxable it's not taxable. If it is taxable I will
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