SPACEX LIKELY AVOIDED FEDERAL INCOME TAXES FOR DECADES, INVESTIGATION REVEALS. (PHOTO).

 SpaceX likely avoided federal income taxes for decades, investigation reveals

Since its founding in 2002, Elon Musk’s SpaceX has become a dominant force in commercial spaceflight and a major launch provider for the U.S. government. A recent investigation suggests part of that dominance may be linked to decades of federal tax avoidance.

Internal company documents indicate that SpaceX has taken full advantage of net operating loss (NOL) carryforwards, a U.S. tax provision that allows companies to offset future taxable income with past losses. By the end of 2021, SpaceX had accumulated nearly $5.4 billion in tax losses, which could be applied to future profits, effectively reducing or eliminating federal income taxes on that income. The tax benefit was made even more advantageous in 2017 when the provision’s expiration date was removed, allowing SpaceX to apply roughly $3 billion in past losses indefinitely.

The company’s revenue growth has been closely tied to government funding. In June, Musk projected that SpaceX’s revenue could exceed NASA’s entire budget next year, reaching $15.5 billion, up from an estimated $13.1 billion in 2024. Federal contracts account for a large portion of the company’s earnings, with documents showing that about 84% of SpaceX’s 2020 revenue and 76% of its 2021 revenue came from government contracts. Over the past two decades, Musk and his companies have received at least $38 billion in contracts, loans, subsidies, and tax credits, with additional ongoing contracts potentially worth $11.8 billion.

Tax experts say the company’s ability to shield billions in future profits from federal income taxes is significant, especially for a business so reliant on public funds. While SpaceX has reportedly paid some taxes to foreign and state governments, it appears the U.S. federal government has collected little, if any, income tax from the company. This situation highlights a paradox: a company that has thrived on government support may contribute far less back to the public treasury than its reliance on federal funding would suggest.