Data centers are a byword for broad tax relief among the citizenry. The previous truth is important to remember as Sen. Ron Wyden (D-OR) pursues a national tax plan to slow data center construction.
To see the profound meaning of this opinion piece’s opening sentence, consider Loudoun County in Virginia. While data centers take up roughly 3% of total land in the County, they shower tax revenue on Loudoun that accounts for 36% of total taxes collected. As opposed to a local tax burden, data centers are the proverbial tax gushers for the counties in which they’re located.
It’s worth remembering in consideration of a recent paper released by Wyden’s office. Local politicians and their constituents would be wise to be skeptical about Wyden’s present aim. That’s because Wyden is promoting an array of falsehoods to make his tax case.
Consider his assertion that data centers “strain limited local resources.” Ok, but see yet again the data center land footprint in Loudoun County.
Wyden adds that “Redevelopment and new manufacturing projects stall as data centers monopolize investment dollars and the time of skilled labor.” This zero-sum fallacy ignores that wealth is created, not extracted from a fixed pie.
Based on Wyden’s analysis, cable companies erred over fifty years ago when they spent enormous sums to wire rural parts of Oregon and other U.S. states to provide television access to Americans living far from the biggest U.S. cities. In reality, the wiring universalized television access in the United States, followed by a transformation of the television experience as ESPN, C-SPAN, HBO, and Nickelodeon (among many other channels) formed to serve a market sizably expanded by the initial expenditures of a nascent cable industry. Only for the gift to keep on giving.
With all the U.S. figuratively wired, the stage was set for the rollout of national internet access on the same wires that brought Americans cable television. What emerged were, among other things, staples of modern American life including Netflix, Google, Facebook and Amazon.
Seemingly constrained by the known, Wyden is focused on the cost of data center rollout without seeing that this same rollout is powerfully expanding the frontiers of economic progress. Implied in the cost of the data centers is that they’ll gift us with products, services and corporations that were an impossible notion previously, and that will render the initial outlays rather small by comparison. Translated, data centers are the personification of the very economic growth Wyden puzzlingly imagines they’ll compromise.
Wyden protests that his aim is not to “end data center development,” but to create a tax infrastructure that “will ensure we have the resources to help the communities and workers most impacted as data center construction continues.” Except that as we see with Loudoun County already, data centers amount to a massively expanded provision of resources that local legislators most attuned to the needs of their constituents can best put to work.
Importantly, it’s not just Loudoun County that’s gaining from data center growth. For instance, Google operates data centers all over the United States (including in Wyden’s home state of Oregon) and around the world, only for the typical Google data center to produce $688 million in local economic activity. Once again, data centers are the tax solution for local governments, not the problem.
Which is why Wyden would be wise to pull back from a national tax plan. It’s a solution in search of a problem, and worse, one that would install even more power in a national government that’s already too big.