Since its inception in 2002, Elon Musk's SpaceX has established itself as the preeminent force in commercial spaceflight and a crucial launch provider for the U.S. government. Recent investigations suggest that its remarkable dominance may be partially attributed to nearly two decades of federal tax avoidance strategies. Internal company documents reviewed exclusively by The New York Times reveal that SpaceX can take advantage of net operating loss (NOL) carryforwards, a provision in U.S. tax law that allows companies to utilize past losses to offset future taxable income.
The documents indicate that by the end of 2021, SpaceX had amassed approximately $5.4 billion in tax losses. This accumulation enables the company to avoid federal taxes on an equivalent amount of future income. This tax benefit is available to all corporations, and in a significant move in 2017, President Trump eliminated the expiration date for these NOLs. As reported by The Times, this adjustment means that SpaceX can potentially apply nearly $3 billion in past losses against future taxable income indefinitely.
In a recent announcement via X, Musk declared that SpaceX's revenue is expected to surpass NASA's entire budget next year, projected to reach an astounding $15.5 billion. According to estimates from Payload, the company's revenue for 2024 is anticipated to be $13.1 billion, a significant increase from $8.7 billion in 2023. This trajectory underscores SpaceX’s growth and its pivotal role in the expanding space economy.
SpaceX is among a group of multi-billion-dollar tech enterprises that have elevated Musk to global prominence, ultimately making him the richest man in the world. The company's substantial growth has been heavily reliant on federal funding. A February analysis by the Washington Post revealed that Musk and his ventures have secured over $38 billion in government contracts, loans, subsidies, and tax credits over the past two decades. Looking ahead, an additional 52 ongoing contracts across seven government agencies—including NASA, the Department of Defense, and the General Services Administration—could yield Musk's businesses an extra $11.8 billion in the coming years.
Most of these lucrative contracts are linked to SpaceX's collaborations with NASA and the Department of Defense. The documents reviewed by The New York Times reveal that nearly 84% of SpaceX’s revenue in 2020 and 76% of its revenue in 2021 originated from federal contracts. Tax experts highlighted to The Times that avoiding over $5 billion in federal income taxes is particularly significant for a company so reliant on government contracts.
Although SpaceX has reportedly paid some income taxes to foreign and state governments since its founding, it appears that the company has not contributed to the U.S. government, according to The Times. This situation raises a troubling paradox: a company whose growth is largely financed by federal support may contribute relatively little back to public finances. Observers note that this unequal relationship is unlikely to change in the near future, as SpaceX continues to play an essential role in the U.S. space economy and national defense.
