SpaceX officials have privately boasted to investors that a tax benefit signed into law by President Donald Trump means it may never have to pay federal income taxes, The New York Times reports.
Trump signed the Tax Cuts and Jobs Act in 2017, allowing corporations to roll over their heavy losses, known as a carryback, indefinitely to skirt paying some federal taxes on their newer profits.
The law allows for SpaceX to legally skirt paying taxes on much of its profits. The lack of an expiration date means it can roll over substantial losses from yesteryear, the Times reports. That’s a massive benefit for SpaceX and its partial owner, Elon Musk, who is the world’s richest man.
SpaceX was bleeding cash for its first two decades in existence—much like other start-up tech firms of the 21st century, including Uber and Tesla.
The company had reportedly racked up $5 billion in losses by late 2021. However, with the help of its successful satellite-based internet offering, Starlink, and a litany of government contracts, the Times reports SpaceX has profited billions since 2022.
SpaceX’s profits are expected to eclipse $15.5 billion this year, Musk said in June. However, how much of that revenue will be directed back to the federal government, if any, is not clear. SpaceX is a private company, so its yearly net losses, profits, and tax documents are not required to be made public.
The Times reports that “SpaceX has most likely paid little to no federal income taxes since its founding in 2002.” The company did not respond to questions emailed by the Daily Beast about its tax situation and plans for the future. Neither did a rep for Musk, who Forbes estimates was worth $412 billion as of Friday afternoon.
A tax expert interviewed by the Times said that SpaceX was abusing a federal law that is meant to keep struggling companies in business.
Danielle Brian, the executive director of the Project on Government Oversight, a group tasked with investigating corruption and government waste, told the paper that the tax benefit “was clearly not intended for a company doing so well.”
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