As they say, there is no escaping death and taxes. And that may apply even in space. All the talk that’s been going on for years regarding space tourism and colonization of the moon and Mars are getting closer to reality. Adam Chodorow, a law professor at Arizona State University, pointed out that “taxes matter, and the way we colonize space will probably be driven by the tax system.” As private enterprise takes an increasing role in going into space, companies need financing, capital and a profit motive and that’s likely going to involve tax incentives via tax deductions and tax credits and that’s likely happening NOW.
In addition, the day will also come when transactions for profit will take place in space. Just imagine you’re a paying passenger in a shuttle on your way to the moon or Mars and you want a drink or snack from the shuttle snack bar or a meal from the commissary at your destination. And of course you want that souvenir t-shirt or replica planet they have for sale there too. How will that transaction be taxed? Right now the United States taxes its citizens based on their “world-wide” income. Will some clever accountant assert that taxation of such transactions not in “our world” are then exempt from taxation? Will the wording in the law need to be changed to “galaxy-wide” income? Such questions are probably just the tip of the iceberg of questions that will someday need to be dealt with. And of course the answers will likely just make our complex tax system, even more complex. Maybe we’ll need accountants someday with a specialty in galactic taxation.
Dale F. Jensen, CPA