The world’s two richest men, who committed billions of dollars of their own money to a private space race, are now eligible for an extra boost from the federal government: a tax break intended to help poor communities.
Jeff Bezos and Elon Musk had competed for nearly a decade to develop engines and rockets through their privately owned space companies when the perk came their way in 2018. Their companies' sites were included among the thousands of tracts across the U.S. designated as Qualified Opportunity Zones, part of President Donald Trump’s plan to use tax breaks to attract investments and jobs to distressed neighborhoods.
At the time, Musk’s Space Exploration Technologies Corp. was building a launch operation along the Texas-Mexico border. Bezos’s Blue Origin had struck a deal to build a $200 million rocket engine plant in an Alabama research park. The companies had already committed to job creation and secured local tax breaks.
The billionaires’ qualification for the federal benefit, which hasn’t been previously reported, enables them to avoid capital gains taxes on money they steer into opportunity zone operations. Those investments can then grow tax-free, and if the billionaires keep their investments in place for a decade, any appreciation can be shielded from federal capital gains taxes forever.
That would be a valuable break for Bezos, whose Amazon.com Inc. gains have made him the world’s richest individual, and Musk, who just became the planet’s second-wealthiest person as the value of his Tesla Inc. stake has swelled.
Their space gambits could fizzle, of course. But they could also generate lofty profits for the pair, who have already received billions of dollars in federal space contracts between them, including for Musk’s SpaceX to deliver four astronauts to the International Space Station last month. Musk said this week he has moved to Texas in part to be closer to SpaceX’s operations.
A third billionaire with celestial ambitions is also poised to benefit. Sir Richard Branson, currently No. 379 on Bloomberg’s global wealth list, is pursuing space ambitions through a public company, Virgin Galactic, that operates from California and New Mexico sites that were also included in the program.
The opportunity zone incentive has come under fire since it was introduced as part of Trump’s signature tax package. Detractors, including academics, neighborhood activists and tax-fairness advocates, say the program has delivered scant benefits to the impoverished areas it was meant to help. Instead, they see little more than tax breaks to wealthy investors.
The space trio’s eligibility rankles these critics in particular, because the plan was designed to spur new investments rather than offer incentives for existing enterprises. But as the proposal became policy, its wording was broadened so that projects that were already in the works in areas that gained the designation—like those of Musk, Bezos and Branson—would qualify as well. The Trump administration’s Council of Economic Advisers determined in August that nearly one-third of the investments eligible for these federal tax breaks “would have occurred anyway,” without the incentive.
“It would be a gross misuse of scarce resources to be subsidizing billionaires to go out into space when there are people struggling with real problems here on earth,” said Brett Theodos, a community development expert who has studied the program for the Urban Institute.