Elon Musk’s satellite and rocket internet company SpaceX has been receiving billions of dollars in federal investments over the two decades of its existence but has paid little to no federal taxes, a report has said.
According to the report by The New York Times, the Musk-owned company has privately told its investors that SpaceX may not have to pay the federal taxes ever, thanks to a change in the law made by US President Donald Trump in 2017 during his first presidency.
Documents reviewed by the newspaper reportedly showed SpaceX can legally make use of the tax benefit that allows it to use over $5 billion losses that it incurred by late 2021 and offset the payment of future taxable income.
In 2017, Donald Trump had made a change in the law that did away with the tax benefit’s expiration date for all companies. Trump signed the Tax Cuts and Jobs Act in 2017 that allowed companies to roll over their heavy losses indefinitely to avoid paying some federal taxes on their newer profits.
This means that SpaceX can apply nearly $3 billion of its losses indefinitely against future taxable income, according to the report.
As per latest figures, SpaceX incurred losses of around $5.4 billion. Those losses generated the tax benefit, known as a net operating loss carryforward.
For a company like SpaceX, which relies heavily on US federal contracts to make profits, not paying federal taxes is quite unusual, as per experts cited by NYT.
SpaceX was bleeding cash for its first two decades in existence since 2002, much like companies including Uber and Tesla. It had over $5 billion in losses till 2021, but turned profitable since 2022.
Elon Musk in June had said that SpaceX may make profits over $15.5 billion this fiscal. However, it is not clear how much taxes it will pay back to the federal government because it can use the tax benefit even if its business thrives.
According to the NYT, which reviewed documents including income statements and balance sheets covering 23 years, SpaceX apparently paid some income taxes over the year. However, it is unlikely that they have been paid to the federal government.
Musk had in June revealed that SpaceX had achieved a milestone, as its “commercial revenue from space will exceed the entire budget of @NASA next year.”