As this year’s legislative session gets closer to the finish line, the race is on in the General Assembly to decide if the hundreds of data centers in Virginia should pay more taxes.
The Virginia Senate passed a budget bill that would end the state’s data center sales & use tax exemption. The exemption began in 2010 as a way to attract data centers to Virginia and was expected to cost the state around $1 million a year.
Instead, data center companies save about $1 billion a year as an AI boom fuels their construction and strains the power grid. Senate Democrats want to end the tax exemption and use the money to help fund things like education and public transportation.
But the budget bill that the House of Delegates passed keeps the data center tax exemption intact. And local labor unions whose members have seen more work with the state’s data center construction boom also support leaving the tax exemption in place.
Critics of the effort to end the exemption worry about data center owners choosing to invest in other states, but it’s hard to imagine that happening in such a way that really diminishes Virginia’s attractiveness to data centers.
Data centers go wherever they have the best infrastructure and workforces to support them.
The data center company Equinix doesn’t even mention taxes in its list of top things to consider when picking a data center location. Rather it says key factors include Internet infrastructure, the presence of other data centers, and a stable, renewable energy grid.
Remember when Amazon held a national sweepstakes in 2017 to see where it should locate a new headquarters?
States and localities bent over backwards to woo the tech giant, offering up massive tax incentives and giveaways. But in the end, Amazon chose places not with the best deals, but with the best infrastructure and workforce: Arlington and NYC. (Every day New Yorkers angry over the billions in government incentives ultimately chased Amazon away).
Ultimately, society should not have to choose between good union jobs and making data centers pay their fair share.