In 1999, a farmer in Taylor, Texas, donated 87 acres to the city to be used as a park. Last year, the town sold it for $10 million to a data center developer. The site that was donated to provide open space for the community is now set to house a 135,000-square-foot facility for servers and power equipment.
A public asset created through private generosity is being converted into a taxable development asset—and being passed off as progress. That may make sense on a municipal revenue spreadsheet, but it raises the harder question of what local governments are counting when they count “value.” Those benefits are real, even if they aren’t reflected in assessed values, property tax revenue, or utility receipts.
Parks are critical public infrastructure; they just don’t look like it on a municipal balance sheet. The value is quieter, coming in the form of public health, heat mitigation, stormwater absorption, recreation, and neighborhood cohesion.
Data centers are more legible to city politicians. They have buyers, price tags, project names, and tax projections. Parks merely have children, shade, grass, environmental improvements, and a public promise to the community. This makes them susceptible to something like ratable-brain: Open space is merely underperforming land, rather than being infrastructure producing public returns that may be difficult to value in dollar terms.
To be fair, local governments do need revenue. Good vibes won’t pay for main street to get repaved. And they must plan for an economy that is increasingly physical in places we’d never envisioned in our cities of tomorrow—take substations, transmission lines, server farms, and warehouses.
But that shouldn’t mean every parcel is waiting for its highest bidder. Land given for a public purpose should be treated as more than sentimental deadweight—and more importantly, so should trust. If local governments want to monetize donated public space, they should account for what taxpayers are losing rather than just what the tax rolls may gain.
Once a city starts taking that trust for granted, it becomes uncertain whether the public can afford to believe the city’s promises. Local governments should tread carefully when building the future. The infrastructure they need most may not be server farms, but the public confidence that makes everything possible.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined a plan to overhaul New York City’s property tax system, the OECD’s intragroup services consultation, and more.
Insights
UN Digital Tax Talks Are Unlikely to Succeed Where OECD Failed
The UN’s current approach to net-income taxing rights over remote and digital services would result in a patchwork of double taxation that inhibits cross-border trade and investment, the Tax Foundation’s Alan Cole says.
Why Squeezing Big Business Harder Won’t Close the UK Tax Gap
The UK’s tax authority should use artificial intelligence to monitor small and medium-sized businesses the way it does large corporations to help close the nation’s tax gap, Ryan’s Jenny Batchelor says.
Companies Battling High Payroll Taxes Must Still Play by the Book
The rise of payroll taxes, especially in states such as California, may tempt companies to pay employees in cash—a move that could open the door to tax evasion charges, writes attorney David Klasing.
Global Groups Must Handle Complexity in UAE’s New R&D Tax Credit
Multinational groups face an additional layer of complexity when claiming the new UAE research and development tax credit, making early modeling and structuring analysis essential, say Dhruva practitioners.
NYC Property Tax Settlement Plan Only Step One in Long Process
Whether meaningful changes can survive the legal, political, and fiscal obstacles that lie ahead for New York City in its attempt to pursue a property tax overhaul will depend on navigating the widely disparate interests of stakeholders—and it seems disposed to leave key constituencies out of the discussion, writes Cullen and Dykman’s David Wilkes.
OECD’s Intragroup Services Rewrite Needs Its Own Benefit Test
The OECD’s public consultation document on special considerations for intragroup services addresses an important issue but fails to provide practical solutions for transfer pricing practitioners, Eide Bailly’s Chad Martin says.
Florida Property Tax Cuts Would Help Homeowners But Hurt Revenue
A Florida proposal to cut property taxes would enact one of the most significant fiscal policy overhauls in the state’s modern history if at least 60% of voters approve the measure in November, write Holland & Knight’s Logan Gans and Michael Castillo.
Technically Speaking
The IRS’s failure to meet data safety standards before sharing address information with Immigration and Customs Enforcement highlights the need for processes that “treat taxpayer confidentiality as a real obligation,” Andrew Leahey writes in his latest Technically Speaking column.
“The threshold for disclosing protected tax information should be held to a higher standard than ordinary administrative convenience,” Andrew writes, arguing that other agencies that want IRS data should first have to prove necessity, precision, security, and auditability.
News Roundup
Colombia Seeks Shield for Multinationals From Global Minimum Tax
Colombia wants to join the US in having its companies exempted from part of the 15% global minimum tax that dozens of countries have already adopted.
Trump Audit Immunity Delays Action on Tax Administration Fixes
A package of bipartisan tax administration fixes compiled by Senate Finance Committee leaders is on the skids over a controversial settlement granting President Donald Trump audit immunity—but key panel lawmakers plan to keep working toward consensus.
EU to Cut Tax Reporting for Big Multinationals in Overhaul
The European Commission will propose exempting large multinationals subject to the EU’s 15% corporate minimum tax law from reporting on their cross-border tax arrangements.
Illinois Governor Approves Taxes on Digital Ads, Social Media
Illinois will collect hundreds of millions of dollars in new tax revenue from the digital economy under sweeping tax legislation Gov. JB Pritzker (D) signed Tuesday.
Tax Management Memorandum
Does Flash, Momentary Ownership Matter for Private Equity Funds?
Morrison Cohen’s Isaac Grossman writes that momentary ownership by a private equity holding partnership creates an unresolved tension between the need to respect that ownership for tax-free rollover purposes and the need to disregard it to protect tax sensitive investors.
Big Law Business
A small group of Big Law tax specialists are counting down the days to July 4, but not in anticipation of a much-needed summer vacation.
These lawyers advise wind and solar energy developers, which face an Independence Day deadline to begin construction if they want Biden-era tax credits that can make or break the business model of major projects, Roy Strom writes in his latest Big Law Business column.
Tax attorneys determine when a developer’s actions meet the legal definition of breaking ground. “It has been exhausting,” said Keith Martin, a Norton Rose Fulbright partner. “We feel like doctors with overcrowded waiting rooms.”
The tax specialists have been working overtime since the Inflation Reduction Act of 2022 ushered in a new tax credit system to boost investments in renewable energy. Then Donald Trump’s One Big Beautiful Bill Act largely phased out credits for wind and solar projects through the “begin construction” deadline of July 4, 2026.
Career Moves
Holland & Knight Brings On Lawrence Hill as New York Tax Partner
Lawrence “Larry” Hill joined Holland & Knight as a partner in its tax practice in New York, the firm announced Monday.
BakerHostetler Brings On Slowinski, Kavanagh as Tax Partners
Richard Slowinski and Stefanie Kavanagh joined BakerHostetler’s Washington office as partners in the tax practice group and members of the international tax team, the firm announced Monday.
Milbank Adds Stuart Alter as Partner in New York Tax Group
Stuart Alter joined Milbank as a partner in its tax group in New York, the firm announced Monday.
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