Missouri U.S. Sen. Josh Hawley is taking another run at the growing data center industry, this time focusing on federal tax breaks.
Hawley introduced the No Tax Breaks for Data Centers Act on Thursday, Sept. 17. The bill would prevent data centers from receiving tax benefits through the federal Opportunity Zone program.
Opportunity Zones were created by Congress in 2017 as a way to encourage private investment in economically distressed communities. Investors can receive federal tax benefits when qualifying investments are made in those areas.
Hawley argues the program is now being used by large technology companies to help finance data center projects.
According to Hawley's office, one report found that between 14% and 17% of data centers nationwide have been built, or are expected to be built, in areas that qualify as Opportunity Zones.
Hawley said his legislation is aimed at closing what he considers a loophole in the program.
“Big Tech companies are getting major tax breaks they don’t need,” Hawley said in announcing the bill. He also said he wants to prevent federal tax incentives from being used to build data centers on farmland.
Under the proposal, data centers would no longer be considered qualifying Opportunity Zone businesses or property. That would prevent investors from receiving the program's tax treatment when purchasing or constructing a data center.
The change would apply specifically to data centers. Other businesses and properties that meet Opportunity Zone requirements would remain eligible for the program.
The legislation comes as data center development continues to draw attention in Missouri and across the country over electricity demand, water use, land use, and tax incentives.
Hawley has also introduced legislation with Connecticut Democratic Sen. Richard Blumenthal addressing electricity costs associated with data centers. That proposal, known as the GRID Act, is aimed at preventing residential customers from carrying additional electricity costs tied to large data center operations.
The No Tax Breaks for Data Centers Act has been introduced in Congress and would have to move through the legislative process before becoming law.
