Data Centers Are Heavily Taxed. How Much is Too Much?

A 90% effective tax rate is possible if exemptions are eliminated.

Nationwide, data center investment is off the charts, fueled in no small degree by the AI boom. Some states are welcoming data centers with open arms, eager to claim additional tax revenue and enjoy the economic benefits of these new operations—and, in some cases, hoping to jump-start their own tech sectors. Other states are more ambivalent or even antagonistic toward data center investment.

There are sound economic reasons for cities and states to attract data centers. Meanwhile, evidence is mounting that, while these operations can be a source of significant new tax revenue, the investments will go elsewhere if taxes are too onerous.

Click here to read the rest on my free SALT Road Substack.