Having friends in Sacramento comes with rich benefits especially if you’re Silicon Valley Billionaire Elon Musk, inventor/entrepreneur, best known as the head of the Tesla electric car company.

The California billionaire Elon Musk has been “lobbying the State Assembly” to get 10-years of property tax breaks for his other company, Space exploration, or Space X, as it is known. The bill on the floor, AB 777, will expand the $100 million tax credit already given to film and TV productions in the golden state to around $400 million.

The California State Assembly last week approved legislation Assembly Bill 777, which will also exempt Mr. Musk’s Space X, a Company that manufactures rockets, from the state’s personal property tax, saving the enterprise $2 Million in back taxes and even more going forward. (WSJ)

This now means that both of Mr. Musk’s companies survive on Government subsidies to the tune of $465 million for Tesla and $278 million for Space X for a grand total of $743 million or in other words three quarters of a Billion of taxpayer’s money.

NASA has already given Space X hundreds of millions in down payments on future launches and may award hundreds of millions more in future contracts for shuttling cargo and astronauts to the International space station. NASA sought to create Space X and funded it up front with cash. New Republic.com

One might ask why the taxpayer is subsidizing a billionaire (like Musk) to build rockets that NASA hopes will one day allow millionaires to pay to travel into space with our astronauts?

Tesla and its very pricey sports car are already beneficiaries of multiple subsidies from state and federal governments, but California is (not) on the shortlist of states under consideration for the firm’s planned mega-factory for batteries. Source: San Jose Mercury news.

The Los Angeles County assessor’s office dinged Space X, (oops) for not paying taxes on some of its property and the issue was to be hashed out in appeal. Space X short-circuited that process with a law exempting (any) space-related property from taxation. It’s a subsidy for Space X, plain and simple and the bill will exempt corporate “tangible personal property” used for space flight, from taxes which is levied on most other commercial equipment.

There is no consistency. The same folks who demand higher business taxes to support public services as a matter of supposed principle now are willing and eager to hand out to certain industries and certain corporation’s big tax breaks.

The movie industry (Hollywood), green energy and Space X situations exemplify an attitude in the Capitol that goes something like this: If you are a politically in-correct business, your taxes should be raised. If you are trendy and green, like space travel and Tesla or your executives contribute heavily to Democratic campaigns, like the film industry then you should get tax breaks.

The top 1% pays about half of California’s income taxes. To maintain the cash flow of these VIP’s amid rising tax rates, politicians and Democrats are offering concierge service and special tax treatment lavished on the very rich. (WSJ)

The problem is California has a property tax for companies like this but they are not subject to the cap. The property tax is not just on the land like taxes on homes or commercial real estate but on (anything) not sold: Sofa, office furniture, filing cabinets, computers, etc. Since this doesn’t come under the cap, no limits in California, it’s racking in the revenues. For the State to only give a handful of these companies a subsidy against the many more that are complying with the onerous tax, which keeps rising, is going to make the paying companies less profits, less competitive and more likely to leave.

Santa Clara County Assessor Lawrence Stone, the lone voice of opposition to AB 777, says quite accurately, “that it sends a dangerous message to corporations, encouraging them to bypass the local property tax system. In effect, it encourages the creation of [two property tax systems], one for the small-business owner or homeowner and another for those major corporations who can afford to lobby their legislation,” says the San Francisco Business Times.

The irony is that Hollywood and the rest of California only had a 20% or $100 million cap, film tax subsidy until last Thursday when SB 777 was passed. Many companies were complaining that other states have these Film tax breaks and they were threatening to leave.

Senator Chuck Schumer, (NY-D) is now suggesting doing the same for Broadway. In fact New York has the largest credit, $400 Million/year. Not to be out done, last week he pushed to get Broadway (Investors) the same subsidy given to their Hollywood counterparts just much larger.

The tax Commission that was created in New York State actually proposed to get rid of the $400 Million tax break and dedicate the money to reducing personal and corporate taxes [for everyone]. This was too logical and fair that it twisted and hurt the Liberal politicians mind and they refused to do it.

Beyond fairness, efficiency and economic growth are being stymied. We are redistributing wealth right back to corporations while squashing growth of the middle class by burying them with higher taxes. This has little economic gain for the State but it pulls in mega bucks for the politicians whose only goal is to be re-elected and secure their job. To do this they need their hand greased from the money of the big donors with the “now available subsidy dollars” to contribute to their campaign and they do.

They retrieve the needed extra revenue from the increased taxes that everyone else has to pay, like the small businesses, and the money from benefactors. It’s a great scam and it’s not limited to blue states.

Georgia has $200 Million film tax credits, and “The Hunger Games” trilogy was shot on location there. The “Breaking Bad” TV series moved from California to New Mexico, which Susana Martinez, Republican Governor, just signed a bill in offering any TV show or film shot on location in the state a whopping 30% tax credit.

It has become a competition addiction among states to do this. A lot of the ‘Red’ states are just now pulling productions out of California. For instance, Louisiana, just last year had the most film productions of any state. North Carolina has joined the ranks and has a tax credit now too. (WSJ)

It’s very bipartisan and around the country.

We have to fix the tax laws with small business sharing in state subsidy money or a fair tax credit that’s not just to help billionaires but level the playing field so that Crony Capitalism can’t be used against small businesses putting them out of production.

This should be picked up by Republicans as an opportunity to run against Democrats that have state and business collusion. That would be a good start to give them some positive momentum from both sides…