Tax Breaks Partly Fuel Data Center Boom, Democratic Report Says

Generous state and local tax breaks for data center building is causing the loss of billions in tax revenue, according to a new report from Senate Democrats.

“Even though data center development is dominated by some of the wealthiest companies in the world, these same companies are not doing enough to pay their ‘fair share,’” the report said. “This leaves ratepayers, taxpayers, and local communities shouldering many of the costs while Big Tech reaps the benefits.”

The report released Friday is another data point on Democratic efforts to spotlight how tech giants are using tax breaks to build facilities powering the artificial intelligence technology that’s of growing concern to voters who are facing rising electricity bills and water shortages.

Authored by Sens. Elizabeth Warren (Mass.), Chris Van Hollen (Md.), and Richard Blumenthal (Conn.), the report alleges tax exemptions data center developers have utilized often require creation of permanent jobs or providing independent energy sources. But, the report said, “the qualifications set such a low bar that they can often be met with relative ease.”

Warren and other Senate Democrats previously sent letters to Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., and Alphabet Inc. demanding information about the extent to which the tax breaks have helped fund spending on the facilities.

To contact the reporter on this story: Chris Cioffi in Washington at ccioffi@bloombergindustry.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com