Week in Insights: Tax Breaks for Data Centers Are Exactly Wrong

Curated by Daniel Xu

Tax breaks for data centers aim to attract jobs to areas of the country with high unemployment. Despite their evident shortcomings, they remain a popular choice for state legislatures—and it seems like a data center tax break arms race is under way. But states should tax data centers more to offset the strain they place on local infrastructure.

Data centers place massive burdens on infrastructure and local resources such as electricity and water, and artificial intelligence is set to increase those burdens exponentially. Exact details on data centers’ resource use can be difficult to find, ...