Tax the Moon That the Earth May Prosper: How to Tax Lunar Occupation

National responses to COVID-19 have varied in efficacy and coordination. While one might imagine that a country’s success in defeating the virus would be strongly correlated with factors such as the presence of advanced medical and technological capabilities, a high GDP, or strong commercial networks, that has not been the case. Consider a snapshot of new cases of COVID-19 reported on a randomly selected day: August 27, 2020. The United States and Switzerland — countries with vastly different populations but that boast two of the world’s highest GDPs — reported more new cases that day (41,926 and 283, respectively) than some of the world’s lowest-GDP countries, such as Haiti and Afghanistan (25 and 38, respectively).¹ Of course, differences in the availability of testing may distort the data somewhat, but the trend throughout 2020 was that well-developed countries were often less successful in containing the virus than less-developed jurisdictions. Impressively, New Zealand — a tiny island nation with a relatively developed economy — has, for the most part, kept its average number of new cases per day below 10 since April 21, 2020.

History has proven that global health crises require global solutions. Consider, for instance, that after centuries of unsuccessful isolated efforts to mitigate the spread of smallpox and polio, the World Health Organization completely eradicated smallpox between 1967 and 1980. It nearly eradicated polio between 1988 and 2019, with only 175 cases reported in 2019 and those cases were isolated in two countries.²

Despite the development of COVID-19 vaccines at a record-breaking pace, our world will struggle with this virus and its longer-term health effects for some time. It should be clear that continuing to develop the WHO’s capabilities is paramount for maintaining global welfare, ensuring the vitality of the international economy, and (of particular interest to the readers of this article) securing a strong tax base. And yet funding for the WHO remains subject to the pitfalls of domestic politics and international relations.³ In the words of one group of doctors and academics: “COVID-19 has revealed shortcomings in WHO’s powers and funding, warranting substantial reforms.”⁴ Our world needs a stable and reliably funded transnational apparatus for ensuring global health — both to respond to pandemics and also to secure access to more routine healthcare.

Faced with earthly disruption, many think our species is on the brink of a new age, one of exploration and industry that will result in moon villages, space hotels, asteroid mines, and humans walking on Mars.⁵ This period of advancement presents immense opportunity as well as immeasurable uncertainty and risk. When risk and opportunity meet, lucrative economic activity soon follows. International law traditionally treats outer space and the celestial objects within it — including the moon — as the common heritage of humankind, meaning those who exploit it should share some portion of their private profit with the rest of humanity.

This author believes that humankind’s exploitation of outer space, beginning with the moon, should be subject to a minimal tax at the global level. This tax should be collected by a nongovernmental organization with the resulting revenue used to fund solutions to global problems, such as supporting the WHO’s effort to guarantee that everyone has access to basic healthcare. If outer space is the shared heritage of humankind, then its economic development should ensure the welfare of all people. Notably, Tedros Adhanom Ghebreyesus, the WHO’s director-general, recently released a letter signed by several world leaders calling for global coordination to “build a more robust international health architecture that will protect future generations” from threats like COVID-19.⁶ As Tedros’s initiative moves ahead, many will ask how to pay for it, and this article offers a novel, practical solution.

While the spirit of this proposal has been voiced by tax scholars for years,⁷ this article is the first to articulate the need for and mechanics of a moon tax — that is, a workable approach to taxing lunar activity based on an international agreement, with the revenue used to address global-scale problems. A thorough search of online resources and legal secondary sources yields some discussion of the implications of taxing outer space activity on a nation-by-nation basis, including summaries of the various treaties that govern outer space activity, but the author is unaware of any article presenting a proposal like the one articulated here for organizing and taxing activities that take place on the moon.

After summarizing the law governing extranational areas, this article develops the above proposal by addressing six issues:

• What about the moon is worth taxing?

• How should this tax be administered?

• Why levy this type of tax at all?

• How can compliance with the tax be facilitated?

• How can a transparent and simple payment system be constructed?

• How should the revenue be spent?

The proposed answers are intended to offer a practical framework that can be used when the time comes for nation-states to confront the inevitability of taxing outer space activity at the global level. A similar but less-developed framework, deriving in large part from the U.N. Convention on the Law of the Sea (UNCLOS),⁸ already applies to the extraction of material from the deep seabed in international waters.⁹

I. Laws Governing Extranational Areas

A. The Common Heritage of Humankind

There are areas on Earth and beyond where no single state can assert sovereignty because of factors including remoteness, harsh climate, and the difficulty of occupation.¹⁰ States and private citizens nevertheless wish to act within these areas, and treaties traditionally determine their legal rights there. Where no single sovereign may rule by right, many may govern by agreement.

As a result, international law characterizes Antarctica, the deep seabed, and outer space as areas belonging to humankind as a whole — or the Common Heritage of Humankind (CHOH). The CHOH principle has no single, widely agreed-upon meaning, and yet it remains a term of art. Generally, it signifies that an area is internationally recognized as being beyond the sovereignty of any single state and, therefore, that any private benefit derived from the area should benefit all humankind in some fashion.¹¹

The Antarctic Treaty,¹² UNCLOS, and the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies (Outer Space Treaty)¹³ all contain language evoking the CHOH principle, as indicated by the italicized language in the table below.

International Treaties and the CHOH Principle

Agreement	CHOH Language (emphasis added)
Antarctic Treaty (preamble)	“It is in the interest of all mankind that Antarctica shall continue for ever to be used exclusively for peaceful purposes and shall not become the scene or object of international discord.”
UNCLOS (articles 136-137)	“The Area and its resources are the common heritage of mankind. . . . All rights in the resources of the Area are vested in mankind as a whole, on whose behalf the [International Seabed Authority] shall act. These resources are not subject to alienation. The minerals recovered from the Area, however, may only be alienated in accordance with this Part and the rules, regulations and procedures of the Authority.”
Outer Space Treaty (article 1)	“The exploration and use of outer space, including the Moon and other celestial bodies, shall be carried out for the benefit and in the interests of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind.”

The CHOH principle does not, however, necessarily require that private benefits are shared equally across all humanity. And, of course, some types of benefits are more easily redistributed among humankind than others. For instance, because a culture of information sharing pervades the scientific field, scientific research is generally easy to redistribute. Further, by design, scientific research generally has minimal impact on the place where it occurs, meaning the same area remains useful and available for others to study in the future. For example, a study of Antarctic seals that U.S. biologists conduct today should not preclude Zimbabwean scientists from studying them tomorrow.

That is not the case with more industrial activities. For example, the extraction of iron ore directly benefits the party extracting it. Redistribution of that ore in kind to the rest of humanity is not practicable. Further, the extraction activity depletes the resource from the area, meaning another party cannot come in later and extract more ore ad infinitum.

When depletion of a valuable finite resource (for example, land, ore, water, or bandwidth) occurs in an extranational area, a tax could be used to facilitate the redistribution of part of the resource’s value among all humankind. A regime of this sort already governs exploitation of the deep seabed, albeit with some administrative defects. As commercial use of the moon becomes more realistic, the world will need to determine the best way to satisfy the CHOH principle’s mandate to redistribute private benefits derived from lunar industry.

B. Treaties Governing Extranational Areas

1. Antarctica

The United Kingdom advanced a sovereign claim to a wedge-shaped portion of Antarctica in 1908.¹⁴ By 1942, six other states — chronologically, New Zealand (1923), France (1924), Australia (1933), Norway (1939), Chile (1940), and Argentina (1942) — had made claims to parts of the region, with several of the claims overlapping. Neither the United States nor Russia ever asserted its own claims, but neither country recognized any previous claim, either.

In 1959, 12 states signed the Antarctic Treaty, which took effect in 1961.¹⁵ Written during the Cold War, it prohibits military use of Antarctica but encourages scientific exploration. To date, 54 states have signed the treaty, which preserves existing claims to the continent while prohibiting any future claims. Specifically, article 4 states that “no new claim, or enlargement of an existing claim, to territorial sovereignty in Antarctica shall be asserted while the present Treaty is in force.”

Further, since taking effect in 1998, the Protocol on Environmental Protection to the Antarctic Treaty protects the Antarctic environment and its ecosystems by, inter alia, prohibiting the extraction of resources from the frozen continent.¹⁶ Article 7 of the protocol states, “Any activity relating to mineral resources, other than scientific research, shall be prohibited.” The protocol’s general provisions remain in effect until 2048, but article 25(5)(a) provides that:

No qualifying regime exists, meaning that mineral extraction — the most lucrative use to which Antarctica could be put — is and will likely remain prohibited.

The international legal regime restricting the use of the Antarctic to peaceful persons and prohibiting its industrial development stems from an effort to balance military, environmental, and economic interests. That environmental and peaceful interests prevailed to the detriment of economic opportunity is perhaps appropriate, given the singular nature of the Antarctic and the importance of maintaining its demilitarized status.

2. The Sea

a. Background

While the Antarctic Treaty has not outgrown its Cold War roots,¹⁷ the law of the sea has changed throughout history and kept pace with developing technology. In 1609 Hugo Grotius’s Mare Liberum advocated for treating the high seas as a global commons beyond the reach of state sovereignty largely because it could not be occupied and resisted traditional notions of property rights.¹⁸ Thus, early Romans and Britons failed in their efforts to annex portions of the high sea.¹⁹

Until recently, the high seas mostly provided a means of transportation, a theater for war, and a source of food. Generally, freedom of movement and a lack of property rights facilitated these activities. Today, developed states have the resources and technology to build artificial islands²⁰ and to locate massive mineral deposits on (and to extract them from) the deep seabed,²¹ meaning that enforceable property rights on the high seas have become desirable once again.

b. UNCLOS Article 82

Enter UNCLOS. Signed in 1982, the agreement classifies various maritime zones, clarifies states’ rights to use and exclude others from some areas, and provides a mandatory arbitration system to settle disputes.²² Specifically, compared with the Antarctic Treaty, one of UNCLOS’s innovations is that it allows for the exploitation of resources beyond a state’s exclusive economic zone (EEZ), which extends for 200 nautical miles from a country’s coast. This arose from a compromise between developed coastal states and less developed or landlocked ones. To date, UNCLOS has been ratified by 150 signatories (149 states plus the EU). Notably, the United States is one of three states (Egypt and Sudan are the other two) that have signed but not ratified UNCLOS.

Under UNCLOS article 77, a state may exploit resources found on the deep seabed beyond its EEZ as long as makes a payment under article 82 to the International Seabed Authority (ISA), which in turn must redistribute the revenue among developing nations. The payment only applies after a deep-sea development’s fifth year in service. The initial amount equals 1 percent of the site’s production, and it increases an additional 1 percent each year until it reaches a 7 percent cap that applies for the remaining life of the operation. In 2017 the Canadian company Equinor established a deep seabed site for the extraction of polymetallic nodules, and Canada will be the first state to owe the ISA an article 82 fee, beginning in 2022.²³

The term “payment” does not precisely describe the levy in UNCLOS article 82. While it may resemble a rent for a lease of the deep seabed or a royalty paid for the right to exploit it, the ISA and many scholars consider the payment a tax, or at least taxlike.²⁴ Generally, the power to tax flows from state sovereignty. A sovereign state taxes its citizens to collect revenue and redistribute it toward initiatives that benefit the public. Treaties are agreements signed by sovereign states. Because the article 82 payment arises under a treaty created by the agreement of sovereign states and raises revenue that is redistributed for the benefit of all humankind, the article 82 payment seems very much like a tax. In other words, this author is among those who call it a tax because it is a fee that a group of sovereigns imposes on private activity to be redistributed for the public good.

3. Outer Space

a. Background

The primary law governing outer space activity is the Outer Space Treaty, which entered into force October 10, 1967.²⁵ To date, 110 states have signed it,²⁶ including all major spacefaring states, making it almost as well-acceded-to as UNCLOS (150 parties) and much more widely accepted than the Antarctic Treaty (54 parties). Notably, the United States is a party to the Outer Space Treaty, which may ensure U.S. participation in future discussions about taxing outer space activity at the global level.

Article I of the Outer Space Treaty states that outer space “shall be free for exploration and use by all States . . . and there shall be free access to all areas of celestial bodies.” Against the background of the freedom to access and use outer space resources, Article II imposes a restriction on claims of sovereignty: “Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.” In combination, these provisions suggest that while states may not assert ownership of any part of, for instance, the moon or an asteroid, a state may nonetheless extract resources from the bodies and carry them away.

An interesting question arises regarding how to apply this rule when the celestial body in question is, for example, a minor asteroid that is completely broken apart, harvested for resources, and carted away. No state could have claimed sovereign ownership of the celestial object, but the total conversion of the asteroid to private use would render the asteroid (or its remains) subject to ownership by a private company located in and registered with a particular state. Put another way, an asteroid miner could use Outer Space Treaty Article I to nullify Article II through the total conversion of outer space real property into outer space personal property.²⁷

Subsequent treaties have expanded the scope of the Outer Space Treaty. This includes agreements concerning (1) the rescue and return of astronauts and objects placed into space,²⁸ (2) liability for damage caused by those objects,²⁹ and (3) the duty to register any objects launched into space with the U.N.³⁰ In 1979 the Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (Moon Treaty)³¹ was signed as another extension of the Outer Space Treaty. However, China, Russia, and the United States have not signed or ratified the Moon Treaty, signaling that by no means does it qualify as customary international law.³² The Moon Treaty goes beyond the Outer Space Treaty, prohibiting not only claims of state sovereignty over the moon, but also claims of ownership over any resources extracted therefrom. Specifically, article 11 states that:

The Moon Treaty suggests that preventing spacefaring states from owning celestial resources is a top priority for less developed states. Given the role these non-spacefaring states may play in defining and enforcing the CHOH principle one day, the Moon Treaty may resurface in the future.³³

b. U.S. Favors Right to Exploit Space

In 2015 the U.S. Congress adopted the Space Resource Exploration and Utilization Act (SRA).³⁴ The SRA provides that:

A space resource is defined in 51 U.S.C. section 51301(2)(A) as an “abiotic resource in situ in outer space.” It is unclear whether this includes only resources that originate in space or also those that are manufactured in space.

In the SRA’s authorizing legislation, Congress included the following disclaimer: “It is the sense of Congress that by the enactment of this Act, the United States does not thereby assert sovereignty or sovereign or exclusive rights or jurisdiction over, or the ownership of, any celestial body.”³⁶ In other words, the United States believes that providing its citizens with the right to take resources from space does not require the United States to assert any sovereignty over celestial areas.

c. International Uncertainty

Whether the United States’ interpretation of the first two articles of the Outer Space Treaty is appropriate remains unsettled.³⁷ Only Luxembourg has joined the United States in acknowledging the rights of private parties to take legal possession of objects from space, and even Luxembourg’s law does not reach asteroid resources.³⁸ Many other countries — including Australia, Japan, and Kazakhstan — explicitly reject the U.S. approach.³⁹ Whether property rights exist in space matters greatly, and expanding outer space commerce beyond communications and remote sensing technologies will require a clear delineation of what a state or person can legally claim.

For example, there are advantages to developing pharmaceuticals in a low-gravity environment. Astropharmacies could lead to the development of new, more affordable drugs and may offer novel methods of delivering drugs to spacefarers as well as to Earth dwellers.⁴⁰ If, however, property rights do not function in outer space like they do on Earth, how could a company ensure that it retains title to drugs it manufactures on the moon or to any intellectual property it develops there?

If it becomes settled law that space resources include both resources that originate in space and also resources that are produced or invented there, then no company would risk doing business there under the existing framework.⁴¹ The lunar taxation regime outlined in Section II, a first step toward taxing lunar commerce for the benefit of all humankind, would not interfere with separate determinations regarding property rights in space.

II. Proposal for Taxing Lunar Development

The coming decades will see the negotiation and adoption of a version of UNCLOS for the moon, perhaps an agreement known as the Lunar Use and Navigation Accord (LUNA).⁴² This could entail a significant revision of the 1979 Moon Treaty, or it could involve that agreement’s formal derecognition and the adoption of a new agreement governing the rights of sovereign states on the moon. LUNA should:

• define relevant terms, including those related to lunar geography and spatial boundaries;

• determine procedures for registering objects that are sent from Earth to the moon;

• impose a moon tax on the occupation and use of space on the moon;

• outline a binding mechanism for dispute resolution; and

• establish an NGO — for example, the Lunar Oversight Authority (LOA) — that will administer LUNA’s provisions, including the moon tax.

As outlined in the following subsections, LUNA should effectively declare a quasi-trust to hold the moon for the benefit of all humankind, with the LOA as trustee ensuring that any benefits arising from the exploitation of the moon are felt the world over.

Before discussing the LUNA proposal in detail, it is worth noting that while taxing the right to use the moon is not the only way to tax lunar activities it is, at least for now, the simplest way in terms of administrability. A lunar income tax would require deciding which states can exercise taxing jurisdiction over the moon and then apportioning a taxpayer’s income between terrestrial and lunar-source income. Further, because the initial costs of doing business on the moon will be high — and costs are likely to remain high until a significant supporting infrastructure is in place, both on the moon and on Earth — most taxpayers doing business on the moon will, especially in early days, generate large losses that would offset their lunar income, if any. On the other hand, an advantage of a lunar income tax is that it might be creditable instead of merely deductible (as an excise tax would be), thus increasing the benefit to taxpayers and possibly encouraging lunar industry to a greater extent.

Alternatively, the lunar tax could be based on a percentage of the value of a taxpayer’s commercial output on the moon, an approach that would more closely resemble that found in UNCLOS article 82. For instance, just as UNCLOS collects a payment based on the value of material extracted from the seabed, LUNA could impose a tax equal to the percentage of the value of material extracted from or manufactured on the moon. If a company mining moon water sold its water for $100 per liter, LUNA could simply collect $1 per liter as part of a 1 percent tax on production. This could protect purely scientific and other noncommercial activities that do not involve any extracted or manufactured material on which to levy such a tax.

This result, however, might run counter to the CHOH principle: It is not just the redistribution of commercial endeavors that can benefit all humankind, but also the redistribution of scientific knowledge and more passive lunar activities. Whether tax-based approaches can be used to redistribute the value of scientific activity is debatable. It may be that the CHOH principle — and thus the tax — should only apply to activities that limit future generations’ opportunity to participate in substantially similar activity. In other words, perhaps a financial responsibility should only arise in exchange for a right to exploit a limited resource. Either way, this author believes that a tax based on lunar use and occupation, outlined below, would be easiest to administer.

A. What to Tax: A Use Tax Funding a Trust

This article proposes a tax levied narrowly on lunar occupation — as opposed to, say, a tax on all outer space activity⁴³ — as simply the first step toward establishing a workable method for taxing outer space commerce to fund beneficial causes. As a first step, the tax should be simple to understand and relatively easy to administer. This is especially important given the challenge of coordinating among many sovereign states and private parties engaged in a broad array of outer space activities, working in different languages, using different currencies, and with countless other differences. Ease of administration should be paramount to attract buy-in from states and maximize the revenue-generating capacity while keeping rates low.

The analysis of what exactly to tax should begin with a consideration of what it is that makes the moon valuable. Presumably, the moon is most valuable “because it’s there” — that is, because it is a place that people want to be. For instance, NASA wants to mine moon water⁴⁴ and SpaceX wants to establish a moon base as part of its Starship project.⁴⁵ But no one can levy a property tax on ownership of lunar land because no one can own lunar land under the Outer Space Treaty. A solution may be for LUNA to use language similar to the law of charitable trusts — placing the moon under the care of the LOA as a trustee, of sorts, with all humankind as the beneficiary in perpetuity. The moon tax would allow the LOA as a trustee to use its moon asset to produce revenue, which the LOA would in turn spend on charitable endeavors to benefit all humankind.

The drafters of UNCLOS faced a similar problem when considering how to permit resource extraction from the deep seabed while benefiting all humankind. Although UNCLOS does not literally impose a charitable trust on the deep seabed, the law of charitable trusts demonstrates that this is what UNCLOS has accomplished in spirit.⁴⁶ UNCLOS article 137 states that “all rights in the resources of the Area are vested in mankind as a whole. . . . [and] not subject to alienation.” Put another way, the deep seabed is an ownerless commons that no one may buy or sell. However, article 137 also states that the ISA administers the seabed for all humankind, and its resources “may only be alienated in accordance with this Part and the rules, regulations and procedures of the Authority.”

As Figure 1 illustrates, UNCLOS solved the “no one can own it, but we still want to tax it” problem by creating an authority to manage something akin to a charitable trust within which the signatory states placed the deep seabed, and then charging a fee based on a percentage of production from operations exploiting the resources. The price for access to the resources held in the quasi-trust is an excise tax on the right to use the entrusted area. The beneficiary is all humankind. In the next few years, the ISA will begin collecting fees from Canada and presumably begin spending the revenue on investments in landlocked developing countries.

The moon, like the deep seabed, is valuable but has been made effectively ownerless by the agreement of sovereign states, specifically by the Outer Space Treaty. Creating an NGO like the LOA that can levy an excise tax on the right to physically occupy space on the moon is the simplest way to tax lunar activity. There may actually be fewer impediments to establishing this occupation- or use-based tax for the moon than confronts the ISA in trying to structure its seabed use tax.

B. How to Tax It: A Grid and a Moon Unit

To keep the moon tax simple, the entire surface of the moon should be mapped via satellite survey and fitted with a grid. The U.S. Geological Survey just completed the world’s first complete mapping of the lunar surface, the Unified Geologic Map of the Moon, which could likely be used to this end.⁴⁷ The moon has a surface area of roughly 38 million square kilometers — roughly twice the size of Russia.⁴⁸ Call each square kilometer a moon unit and levy a flat tax on occupation per unit.

The fact that a scientific map of the moon already exists removes a major impediment to implementing a reliable tax based on occupation of the lunar surface. One challenge UNCLOS faces in implementing the deep seabed tax is that only a small fraction of the deep seabed has been mapped.⁴⁹ Efforts to map it are ongoing, but a complete seabed map may not be available until 2030 or later.⁵⁰ The lack of a seabed map may be one reason the tax is calculated as a percentage of resources extracted from the sea floor rather the amount of the seabed used. Further, a dearth of knowledge regarding the nature of the deep seabed was one reason the original version of UNCLOS included a mandate that states undertaking investigation of deep-sea areas share the information they learn with the ISA. Despite some revisions to these provisions, concerns about the need to share information that is so costly to obtain are among the reasons the United States has never signed UNCLOS.⁵¹

LUNA would include a provision levying an excise tax on the right to occupy a moon unit. The amount of the levy would be one of the many points negotiated when LUNA is drafted.⁵² For simplicity’s sake, Figure 2 imagines that the moon tax is a yearly levy of $20,000 per moon unit. Even if only 2.5 percent of the moon is occupied — that is, 950,000 square kilometers, an area about the twice the size of California — the moon tax would gross $19 billion each year. Thus, if administration costs equaled 3 percent of the amount of revenue collected — an incredibly high estimate — the LOA could still collect about $18 billion each year.⁵³ If the WHO is the beneficiary of the moon tax, this revenue would nearly quintuple the WHO’s annual budget, which is usually around $5.5 billion.⁵⁴ If even half of moon tax revenue was added to the $1 billion the WHO dedicates annually to its efforts to expand universal healthcare, that would increase the WHO’s impact in that admirable endeavor ninefold.

Although that is an astounding worldwide benefit, some will likely argue that adding a moon tax to the cost of doing business in outer space would deter investment and render activity on the moon impracticable. The numbers suggest otherwise. Currently, it costs about $2,750 to send one pound of material into low Earth orbit (for example, to the International Space Station).⁵⁵ This is a vast improvement over several years ago, when NASA estimated the cost was about $10,000 per pound.⁵⁶ NASA and its collaborators hope to lower the cost of launching objects from Earth to just hundreds of dollars per pound by 2025, but the industry appears far short of that goal at the moment.

Thus, for reference, it would currently cost around $80,000 to send a 24-pack of bottled water, which weighs about 30 pounds, into space. Imagine you are shipping enough solar panels to the moon to cover one moon unit. Some ultralightweight solar panels weigh only about 0.001 pound per square meter, meaning you could cover one moon unit with about 8,000 pounds of those special panels⁵⁷ and generate a significant amount of energy to power, say, SpaceX’s moon base. Today, transporting that much weight to the moon would cost around $22 million. If NASA or SpaceX manages to bring the cost of shipping one pound of material into space to $1,000, then the cost of that solar panel shipment would drop to $8 million. As Figure 3 illustrates, the $20,000 that the company would hypothetically pay the LOA for the right to fill one moon unit with solar panels would be only 0.25 percent of the cost of getting all those solar panels to the moon in the first place. In other words, the moon tax would be a negligible cost relative to the capital-intensive undertaking of placing infrastructure on the moon.

Thus, the moon tax suggested above is unlikely to present a financial disincentive to doing business on the moon. Further, because lunar land may not be owned, parties doing business on the moon need not purchase the real estate on which they operate. The $20,000 tax per moon unit seems like a relatively meager yearly lease payment, akin to the fees that leaseholders in England pay to the Crown and other freeholders,⁵⁸ who own much of the land in the United Kingdom.

After the LOA lays out the moon grid, it can begin registering all objects launched into space for installation on the moon. Under the 1975 Convention on Registration of Objects Launched Into Outer Space, the U.N. already requires the registration of all space-bound objects with its Committee on the Peaceful Uses of Outer Space.⁵⁹ Thus, the LOA should not encounter much difficulty determining which states and private entities launch objects into space for placement within moon units.

Further, it should be fairly simple and affordable for the LOA to maintain a moon-orbiting satellite or two to scan the lunar surface to keep track of which moon units are in use. Estimates vary, but maintaining a small satellite in lunar orbit could cost the LOA as little as $1 million per year, especially as costs continue to fall with the rise of more efficient technology like satellites the size of a postage stamp.⁶⁰ When a lunar occupant wanted to abandon its moon unit, a satellite could confirm that the abandonment had taken place, and the LOA could then notify the U.N. to update its registry to reflect that the moon unit was no longer occupied.

C. Why Tax It: Environmental and CHOH Affairs

One may question why a moon tax is needed at all, or whether the proposal is even a tax. In short, much like the UNCLOS article 82 payment,⁶¹ the proposal is a tax because it is a payment created in accordance with an agreement among sovereign powers and collected for redistribution to benefit the sovereigns’ subjects. It is necessary for at least two reasons: (1) to protect the lunar environment, and (2) to comply with the policy inherent to the CHOH principle.

Despite its reputation as pristine and sterile, outer space is becoming increasingly filled with human-made pollutants and debris.⁶² Unfettered access to the lunar surface would encourage the heedless strewing of debris across the moon, increasing the likelihood that spacefaring states would simply pollute one area and move on to the next when the first area becomes undesirable. This presents the risk that a significant portion of the moon may be covered in garbage by the time less-developed states become capable of space travel.

Taxing the occupation of moon units discourages early occupants from engaging in this sort of behavior. Once a participant places objects on the moon, it would be liable for paying the tax associated with that moon unit. If SpaceX operates in moon unit 1 for 10 years, fills it with debris, and moves on to moon unit 2, it must pay tax on unit 1 as well as unit 2. A provision in LUNA could specify precisely what types of cleanup and remediation would be required to free a former occupant from tax liability for a previously occupied moon unit.

The ability to motivate occupants to take good care of their moon units provides another reason why the moon tax should be an excise tax on occupation rather than, for example, a tax on production or return on assets. A tax based on production does nothing to prevent the pollution of the area generating the production. When a facility is shut down, it ceases to produce but continues to occupy — and potentially harm — the lunar environment.

These environmental concerns go hand in hand with the policies behind the CHOH principle. If outer space, the moon, and all other celestial objects are theoretically the common heritage of all humankind, then it is incumbent upon those entrusted with the administration of those areas to maintain them for future generations. Placing reasonable financial burdens on those who wish to alter the lunar environment is not only simply rational, it is necessary if lunar commercial activity is to remain sustainable now and in the future.

D. Who Pays: Lunar Actors Reimburse States

Because the moon tax would arise under a treaty entered into by sovereign states, those states would be responsible for paying the LOA their share of moon tax. The states would then be responsible for seeking reimbursement from the public and private actors that generated the liability. The requirement that all parties launching objects into outer space register with the U.N. should make it simple for states to track down the parties from which they need reimbursement.

For example, if SpaceX launches a rocket filled with materials for constructing its moon base, it would need to register that launch with the U.N. Committee on the Peaceful Uses of Outer Space. The registration process is already fairly simple. A check-the-box system that simply asks whether the launch contains objects bound for a moon unit could facilitate moon tax recordkeeping. If the answer is yes, the registrant could just check the box and specify the moon unit by number. National and regional governments already have similar recordkeeping measures. States could pass legislation imposing civil fines — perhaps set much higher than the cost of the moon tax itself — for a party’s failure to properly register its occupation of a moon unit.

For example, suppose that in the early years of commercial moon occupation, the United States receives a bill from the LOA for $100,000. This would signify that parties affiliated with the United States are occupying five moon units. The appropriate U.S. office would consult the U.N.’s registry and find, for example, that NASA had occupied one moon unit and SpaceX occupied four. The United States would pay the LOA, and NASA and SpaceX would pay the United States. The reimbursement from NASA would really just involve the U.S. government moving money from one pocket to another to pay the LOA. From SpaceX’s vantage point, the payment to the U.S. government would be a section 162 ordinary and necessary business expense that would be deductible against gross income. If Congress really wanted to create incentives for private development of the moon, it could pass legislation making moon tax payments creditable.

Canada is already contemplating the mechanics of such an operation. Under UNCLOS article 82, Canada will soon be required to begin making payments to the ISA for Equinor’s exploitation of the deep seabed. Although no final reimbursement system has been established, it appears that the cost of the article 82 payment will ultimately be passed on to Equinor. Even though the United States has not joined UNCLOS, its deep seabed mining leases require lessees to reimburse the U.S. government for any amounts it may owe the ISA if the United States joins the treaty. Any article 82 payments made by seabed lessees would be creditable against the royalties those mining operations owe the government. The Canadian and U.S. approach to article 82 — that is, having the state pay the tax and then seeking reimbursement from the private party — is likely the approach states would follow when paying the moon tax.

Notably, the U.N.’s registry of space objects is currently available in a basic online format, but registering each space object on a blockchain made available for public access could encourage popular interest in inspecting and tracing space objects that are put into use on the moon. To save the LOA and parties doing business on the moon time and administrative expense, for instance, the LOA could reserve a nominal portion of moon tax revenue for microdonations to charities in return for public tracking of details about objects placed on to the moon, including their potential risks as time passes, such as the danger of clutter, leakage from power sources, and potential contamination of lunar environment.

E. How to Pay: Mooncoin on the Blockchain

To make the payment and reimbursement process more streamlined and up to date, LUNA could direct the creation of a blockchain and a dedicated cryptocurrency — perhaps called Mooncoin — that states and the moon occupants could use to pay their moon tax liabilities. The blockchain would only be accessible to the LOA, state governments that owe moon tax, and any parties that are required to reimburse their governments for moon tax. That is, Mooncoin would not be available for public trading or speculation. Having a centralized cryptocurrency with which to pay the moon tax would address the problems created by a variety of states making payments in different currencies that are subject to different stresses and uncertainties. Under the LUNA, one Mooncoin could, for instance, be worth $20,000, and its value and transactions could be managed by a subdivision of the LOA that is responsible for running the Mooncoin exchange.

Using a cryptocurrency would reduce administrative burdens. If SpaceX wished to launch objects from Earth to occupy area on the moon, it would need to register with the U.N. That registration could be accompanied by an obligation under LUNA for SpaceX to simultaneously establish a Mooncoin reserve by buying a corresponding amount of Mooncoin. Further, LUNA might mandate that by registering to occupy a moon unit, SpaceX is also authorizing the LOA Mooncoin exchange to automatically transfer the equivalent of $20,000 per moon unit from SpaceX’s account every year it continues to occupy its unit and to use these funds to purchase necessary Mooncoin. Because Mooncoin would not be publicly available, the U.N. would provide SpaceX with a code it could then use to obtain its Mooncoin from the LOA’s private exchange.

Further, Mooncoin could be wrapped in a smart contract — like Ethereum or any utility token — that is coded to automatically pass from wallet to wallet at tax collection time. When it came time for the United States to pay its share of moon tax to the LOA, the Mooncoin in SpaceX’s crypto wallet would simply pass by operation of computer-coded smart contract to the wallet maintained for the U.S. government. The United States could then transmit its Mooncoin to the LOA to complete the transaction. Figure 4 illustrates the operation of the Mooncoin system, all of which could theoretically happen in mere seconds.

Under this system, auditing moon tax transactions would simply be a matter of looking at the blockchain. The beauty of this system is that the LOA already has its money when SpaceX registers its initial occupation of a moon unit. The transfer of Mooncoin from wallet to wallet is only a tracing device to record the transaction. In the next year, assuming SpaceX has not followed the procedures for abandoning its occupancy of the moon unit, the LOA would automatically transfer another $20,000 from the account SpaceX had previously specified and issue SpaceX another Mooncoin.

F. Spending the Revenue: Funding the WHO

This article assumes that the CHOH principle is a legitimate part of customary international law that justifies subjecting commercial lunar activity to a tax akin to the article 82 payment outlined in UNCLOS. If we must have the tax, then what should the LOA spend it on? Given our recent experience with COVID-19, investing the revenue in the WHO seems like a solution that all humans should be able to stand behind.

Not only would helping the WHO ensure access to robust, basic healthcare for every human being benefit individuals, it would likely cause a variety of beneficial ripple effects as well. Political proponents of foreign aid and the funding of international health organizations could rest assured that the WHO would remain robustly funded even if opponents of those efforts cut the relevant government spending (as President Trump briefly did in 2020). Those opposed to government spending on federal and state health and wellness programs would likely see the need for that spending decrease over time as the moon-tax-funded WHO develops its ability to build safe and healthy communities. The benefits are easy to imagine. For instance, police departments would not find themselves called upon to address the public’s mental health needs without the appropriate training. A rise in public health would likely lead to a decrease in more advanced morbidities, which would in turn make those conditions and diseases simpler to eradicate. In turn, this could help lower the cost of health insurance. The list goes on.

To be clear, the author does not necessarily believe that this is how the moon tax revenue must be spent. Funding the WHO is simply a proxy for the proposition that global problems need global solutions. This will become increasingly true as the world becomes even more and more globalized. Because, as the last decade has shown, globalization has a tendency to result in the election of xenophobic and nationalistic world leaders who are bent on protecting the few to the detriment of the many, it is apparent that Earth needs a depoliticized revenue source to address its most pressing problems. There is no reason why the moon tax could not also pay for the retrieval and elimination of space debris or fund coordinated efforts to reverse climate change.

And the moon tax is only a first step: What about an asteroid mining tax? A low Earth orbit tax? A Mars tax?

III. Conclusion

In summary, an excise tax on lunar occupation levied by a global organization could provide a significant source of revenue for combating Earth’s most daunting challenges: ensuring universal access to basic healthcare, mitigating climate change, and so on. Existing international law provides substantial authority for placing extranational assets like the moon in trust under the fiduciary care of an NGO and charging a fee for its use. Further, a minimal moon tax is unlikely to stymie commercial lunar endeavors. If anything, the tax could actually be an incentive as more corporations begin to integrate environmental, social, and governance frameworks into their business plans — that is, companies consider how they can earn profits and minimize risk while doing societal good. The moon tax is a simple means to a worthy end.