Featured Image Credit: Kevin Dietsch / Staff via Getty
Elon Musk's billion-dollar company has seemingly been found to avoid certain tax contributions.
Just this past March, the Institute on Taxation and Economic Policy (ITEP) revealed Tesla paid $0 of federal income tax, despite pulling in around $2.3 billion in US income last year.
And while the world's richest man is vocal about his stance against government welfare programs, the billionaire has reportedly benefitted extensively from government support through his various enterprises.
Now, newly leaked documents suggest his space company might be following a similar tax-free playbook.
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According to a New York Times investigation, internal SpaceX documents reveal that Musk has suggested to investors that the company may never have to pay income tax.
This has likely been the case for years, with the documents revealing just how advantageous SpaceX's tax situation has become.
The NASA contractor can utilise a tax benefit that allows them to offset future taxable income using the $5 billion in debt accumulated before 2021.
Thanks to a 2017 rule change implemented during Trump's first presidency, this offset can continue indefinitely.
Given SpaceX's heavy reliance on government contracts, tax experts explained that the indefinite tax break is pretty substantial for the company. Musk's company is pretty centred in national security also as it has close ties with the Pentagon, NASA and other agencies.
"Given the size of its net operating loss, the company almost surely didn't pay any federal tax for years," remarked Gregg Polsky, a tax law lecturer at New York University. "And it’s so large, it’s unlikely it has paid taxes even if it has had positive taxable income in recent years."
In one document, SpaceX executives told investors that it was 'more likely than not that some portion or all of the deferred tax assets will not be realised.'
Companies that frequently report losses tend to use this kind of language, as reported by accounting analyst Robert Willens.
It’s pretty ironic when you stop to think about where SpaceX gets its money from.
SpaceX also has at least $227 million in carryovers that could offset state taxes, plus another $1.1 billion in federal and state tax credits.
Federal contracts made up the vast majority of its income in previous years, $1.4 billion (83.8 percent) in 2020 and $1.7 billion (76 percent) in 2021.
"Billionaire freeloaders don’t pay taxes," the Rhode Island senator wrote. "Republicans pile on the debt to keep the billionaire freeloader train rolling."
