Elon Musk, Jeff Bezos Use Anti-Poverty Tax Breaks for Private Space Race

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. Subscribe to our YouTube channel: https://bit.ly/2TwO8Gm Bloomberg Quicktake brings you live global news and original shows spanning business, technology, politics and culture. Make sense of the stories changing your business and your world. To watch complete coverage on Bloomberg Quicktake 24/7, visit https://bloom.bg/2UdVC2M, or watch on Apple TV, Roku, Samsung Smart TV, Fire TV and Android TV on the Bloomberg app. Have a story to tell? Fill out this survey for a chance to have it featured on Bloomberg Quicktake: https://bit.ly/2J5MnQe Connect with us on… YouTube: https://www.youtube.com/user/Bloomberg Breaking News on YouTube: https://www.youtube.com/c/BloombergQuickTakeNews Twitter: https://twitter.com/quicktake Facebook: https://bit.ly/35epL8Q Instagram: https://bit.ly/32sC5jW