Since its founding in 2002, Elon Musk’s SpaceX has grown from a bold idea to a global leader in commercial spaceflight. However, behind its rapid growth lies not only technological genius, but also 20 years of using legal tax schemes. Recent data shows that SpaceX has managed to avoid paying billions of dollars in US federal taxes, largely thanks to government contracts that have fueled its financial rise.
Exclusive internal company documents reviewed by The New York Times reveal the mechanism behind this financial paradox. SpaceX actively used a provision of US tax law known as Net Operating Loss (NOL) carryforward. It allows companies to use losses from previous years to reduce taxable income in the future. By the end of 2021, Musk’s company had accumulated nearly $5.4 billion in such tax losses. This amount will allow it to avoid paying taxes on a similar amount of future income. It is important to note that following the 2017 reform, the company can utilize these losses without any time restrictions.
State is the main investor
The foundation of SpaceX’s success is large-scale government funding. An analysis by the Washington Post showed that Musk and his business empire have received at least $38 billion in government contracts, loans, and subsidies over the past two decades. Most of them are agreements with NASA and the US Department of Defense. This dependence on budget funds is impressive: in 2020, almost 84% of SpaceX’s revenue came from federal contracts, and in 2021, 76%. In addition, seven government agencies have active contracts with the company worth an additional $11.8 billion.
Paradox of rapid prosperity
Tax experts point out a significant problem: a company that has grown mainly thanks to state funds is evading contributions to that very same state treasury. Documents show that since 2002, SpaceX has paid taxes to foreign governments and state administrations, but has likely made virtually no contributions to the US federal budget. This creates a disturbing paradox, where the key performer of government contracts and guarantor of national security does not actually finance the system that created it. And as long as SpaceX remains the backbone of the country’s space economy and defense, this one-sided relationship is unlikely to change anytime soon.
We previously reported that Elon Musk was secretly funding China.
