The New York Times got its mitts on some confidential documents showing that Elon Musk’s privately held SpaceX had likely paid little or no income tax since being founded in 2002. And the company is even secretly telling investors it may never have to pay any. It’s all part of the joy of how the American tax system props up the ultrawealthy, especially when they are bad at business.
Here’s how it works. SpaceX accumulated over $5 billion in losses by late 2021. There was an existing tax benefit that allowed companies to offset future taxable income, then Trump’s 2017 tax changes eliminated the expiration date on the benefit. Now SpaceX is able to apply almost $3 billion of losses against that future taxable income indefinitely.
It’s always been known that SpaceX gets billions in federal contracts, but because the company is privately held, no one knew what portion of its profits relies on those contracts. The Times found that in 2020, those contracts generated $1.4 billion, or almost 84%, of the company’s total revenue. In 2021, federal contracts represented $1.7 billion in revenue, or 76% of the total.
It’s a pretty sweet deal for SpaceX—and for Musk, who owns an estimated 42% of the company. Meanwhile, taxpayers are getting double-charged. Billions of your tax dollars go to contracts for SpaceX, which then gets to avoid paying taxes. Meanwhile, NASA, the government institution with a rich and successful tradition of space exploration, is seeing both its staffing and funding decimated.
With the huge reliance on federal contract dollars, it’s questionable whether SpaceX would continue to exist without relying on government handouts. And let’s not forget that the company gets other government benefits, like Texas working to sweep away regulations so the company doesn’t have to spend money to follow environmental rules.
Musk has a similar sweet welfare deal going on over at his electric vehicle company as well. Tesla makes a lot of money via selling tax credits. Under a government program meant to incentivize carmakers to build low- or zero-emission cars, Tesla earns that tax credit by manufacturing electric vehicles. It is then able to turn around and sell credits to other manufacturers that need carbon credits to meet climate regulations. Over the past decade, Tesla made $10.7 billion through this process, representing about a third of its profits during that time. In the first quarter of 2025, Tesla would reportedly have posted a loss but for the credits.
Musk and his companies aren’t the only ones gaming the tax system. The whole thing is reminiscent of Trump’s ability to avoid income taxes because he sucks at running companies. For eight out of 10 years, from 1985 to 1994, Trump was able to pay no federal income tax because he lost so much money. His 1995 filings showed a loss of $916 million, a sum so large that experts told The New York Times that Trump could have avoided taxes for up to 18 years.
Trump got this benefit in a way similar to that of Musk: The tax code has a giant loophole where business owners can use their losses to offset taxes on future income.
We’re forced to treat people like Trump and Musk as if they were business geniuses and wealth and job creators. Instead, they are people who are bad at keeping their companies and themselves afloat absent government handouts. This is nothing but capitalism for gains, socialism for losses. We all bear the burden of subsidizing their crappy business models, but they get all the upsides and profits.
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