Shutting Down Data Center Subsidies

Data centers (occasionally called “server farms”) are facilities housing computers that store and process back-end information for the web. Their importance exploded with the rise of cloud computing — and artificial intelligence and cryptomining is accelerating that demand exponentially. Their proliferation has prompted more than two dozen states to adopt subsidy programs designed to attract data center investments. 

The giant subsidies are being felt by taxpayers, who are giving Big Tech billions of dollars in exchange for few jobs, and ratepayers, who are seeing energy bills rise in part to pay for energy costs passed on by corporate giants that can negotiate for cheaper energy rates directly with utility companies.

Most states subsidize data centers by offering their owners sales and use tax exemptions on purchases of hardware and software, which can last for as long as 40 years. Data centers also enjoy full or partial exemptions from property taxes.

Because data centers are so critical to the operations of a company, communities shouldn’t be subsidizing them; incentives are wasteful if they pay a company to do what it would do anyway. If a community insists on using subsidies to attract data centers, they should require all subsidy costs to be disclosed to the public; mandate that the jobs created be permanent, full-time and pay market wages; and ensure construction workers and maintenance workers are paid prevailing wage.

Recent work on Data Centers