Critics' erroneous allegations that these facilities consume excessive amounts of water and power while passing on the costs to the rest of us has seen public support for them collapse.
asserted
support → consume → them
Policymakers have responded with onerous new land use regulations, and even full-on moratoriums, on new data center projects.
asserted
Policymakers → respond → projects
Not content with zoning these projects out of existence, politicians are now looking to tax them into oblivion as well.
asserted
politicians → zone → oblivion
At the federal level, and in dozens of states, legislators are proposing to exclude data centers from various business tax incentives and exemptions.
asserted
legislators → propose → incentives
In Congress, Sens. Mark Warner (D–Va.) and Ron Wyden (D–Ore.) have both proposed bills that would exclude data centers from certain tax exemptions for capital investment.
asserted
that → propose → investment
Wyden's bill would also levy a new gross receipts tax on data enters.
asserted
bill → levy → enters
The National Conference of State Legislatures reports that 28 states have considered legislation to pare back or eliminate "tax incentives" provided to data centers, with the most common target being sales tax exemptions on their purchases of software, equipment, construction materials, and other business inputs.
asserted
target → report → software
Proponents of these tax changes argue that they are merely eliminating special tax breaks that unfairly favor data centers while shifting more of the tax burden onto ordinary citizens.
asserted
that → argue → citizens
"Michigan families are working hard to keep up with the rising cost of gas, groceries, and child care.
asserted
families → work → gas
They shouldn't be asked to shoulder more of the burden while data centers and big tech companies already making record profits get another giant tax break," Rep. Kristen McDonald Rivet (D-Mich.) told Politico.
asserted
Rivet → ask → Politico
Yet most of the sections of the tax code being amended are standard exemptions offered to most businesses as a matter of course.
asserted
most → amend → course
As a recent Tax Foundation brief on state-level data center taxation argues, the most palatable sales tax "falls exclusively on final consumption," as that does less to penalize investment and economic growth.
asserted
that → argue → investment
Axing a sales tax exemption for data centers' spending on new servers, construction material, and the like would make state sales taxes more of a tax on investment.
asserted
taxes → ax → investment
By treating data centers differently from other businesses, it also makes the tax code more distortionary.
asserted
code → treat → businesses
Not all states' sales tax exemptions for capital spending are created equal.
asserted
exemptions → create → spending
Some apply to data centers by virtue of generally applying to all businesses.
asserted
Some → apply → businesses
Others offer exemptions to data centers only if they meet certain levels of investment or employ a certain number of people.
asserted
they → offer → people
The Tax Foundation paper criticizes the latter practice for transforming what should be a neutral, widely available exemption into a targeted tax incentive.
asserted
what → criticize → incentive
But lawmakers' more recent efforts to amend or eliminate exemptions for data centers would make the tax code even more slanted in favor of some businesses over others.
asserted
code → amend → others
Press coverage of these sales tax exemptions invariably describes states as "losing" money on them.
asserted
coverage → describe → them
But this formulation flips reality on its head.
asserted
formulation → flip → head
A state with zero data centers would "lose" nothing by including data centers in its sales tax exemption.
asserted
state → lose → exemption
But it would also receive no revenue from the taxes that still would apply to non-existent data centers.
asserted
that → receive → centers
If a data center did move into that state, tax revenue would go up.
asserted
revenue → move → state
So too would the "loses" stemming from the sales exemption.
asserted
loses → stem → exemption
It's an odd notion indeed to say that the more taxes data centers pay, the more they're costing the state.
asserted
they → say → state
Under the Republicans' recently passed tax reform bill, data centers are among the businesses that can claim "full expensing" of their equipment spending.
uncertain
that → pass → spending
That means that they can deduct the full cost of their capital spending from their taxes in the year that it was spent.
asserted
it → mean → year
(Under prior tax regimes, they had to spread their claimed deductions over many years.)
asserted
they → have → years
There's been some robust debate on social media among tax policy wonks about whether full expensing is in fact a tax subsidy.
asserted
expensing → be → fact
Wherever one lands on that debate, data centers are hardly the only kind of business that can currently claim this exemption.
uncertain
that → land → exemption
Excluding them from this exemption, as Warner and Wyden's bills would do, would make the tax code more riddled with favoritism.
asserted
code → exclude → favoritism
The backlash to data centers is driven in part by the fact that the country is going through a data center boom.
asserted
country → drive → boom
As data centers being built, the fiscal implications of how they're taxed grow as well.
asserted
they → build → ?
The distinction between a cronyist tax advantage and a neutral decision to not levy a particular tax on a certain type of economic activity can be a fuzzy one.
asserted
distinction → levy → activity
Some data center projects do benefit from the former.
asserted
projects → benefit → former
But the current rush to tax data centers more heavily has nothing to do with making the tax code more fair.
asserted
code → tax → nothing
It's a punitive shakedown of a disfavored industry that will make the tax code less fair and all of us poorer.
asserted
all → make → us
The Aporia
