Data Center: States Seek to Attract Data Centers
by Jeffrey Clark for Data Center Journal
Around the United States, state governments are seeking to offer tax breaks and other incentives to companies that build data centers within their borders. These incentives are an attempt to rebuild some economic muscle in the wake of the recent economic downturn. Many states are facing tremendous budget shortfalls and falling tax revenues, and some view tax incentives for data centers as a small initial investment that could pay tremendous dividends through new jobs (and hence income taxes), property taxes, and other government revenue sources.
One state that has made an effort in this direction is Missouri, but a state senate panel recently removed provisions from a bill that would have provided a sales tax break to companies for IT equipment purchases to be used in constructing or supplying data centers. Although these provisions in the bill found favor in the eyes of Missouri legislators (including a majority in the Missouri House), John Griesheimer, a senate committee leader, believes “additional measures [render] the bill unconstitutional and jeopardized the success of incentives intended for Ford Motor Co.,” according to KansasCity.com (“Missouri Senate panel scales back legislation to only tax incentives for automakers”). Thus, the incentives for data centers seem unlikely to become law in Missouri. The Data Center Journal recently noted that Washington State has offered tax incentives for newly constructed or expanded data centers (“Washington State Tax Break Spurs Data Center Development”). Similar to the likely-defunct Missouri tax incentives, the incentives in Washington involve a sales and use tax exemption for purchases of certain types of data center equipment. The Washington incentive also focuses primarily on data center construction or expansion in rural areas.
According to an April 2010 joint press release of the Wyoming Business Council and Green House Data (“Wyoming Offers Data Center Tax Incentives While Neighboring States Raise Tech Taxes—Green House Data Shares the Wealth Offered Through State Incentives”), the Wyoming Legislature offers “sales-and-use tax exemptions to data centers for equipment purchases of more than $2 million if the center has also made a $5 million capital investment in the state.” The state government also, as the press release title indicates, plays up its business friendliness with regard to the tax situation of neighboring states.
