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Shadow Tax.

Recently, Reuters reported on a tax collector's attempt to snag satellites hanging 22,300 miles above Earth in geostationary orbit. Los Angeles County assessor Rick Auerbach claimed that eight Hughes Electronics communication satellites were taxable as "movable property that was currently out of state, similar to construction equipment."

Way out of state, George Jamison, a Hughes vice president, pointed out. He further explained that the satellites are not now, never have been, and never will be in the state of California.

The State Board of Equalization disagreed with Auerbach in a unanimous vote, but, displaying the cardinal virtue that has sustained his profession over the ages (doggedness), the tax collector was considering a court challenge.

With the principle of nexus literally up in the air with the Internet, communications, and space exploration, Auerbach's actions raise some interesting questions. Is it time to look more closely at the space shuttle's flight paths; do satellites need license plates? And by the way, where are the moon rocks? Do they create a tax liability? The moon is, after all, a pretty big piece of property currently out of state.
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Publication:Strategic Finance
Article Type:Brief Article
Geographic Code:1U9CA
Date:Sep 1, 2001
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