Data centers have become a flash point around the state, with some Iowa counties enacting moratoriums. Both candidates for governor have proposed tax changes for data centers.
National Taxpayers Union President Pete Sepp said data centers will power America’s economy “for at least 25 years” and policymakers should establish “consistent, uniform tax policy” for data centers. “Enacting bans on data centers or slapping higher taxes on them that other businesses don’t have to pay — that’s the wrong direction for a rational policy,” Sepp said.
Rob Sand, the Democrat running for governor, has called for ending the state sales tax exemptions for the computers, servers and other equipment purchased for data centers. Zach Lahn, the Republican candidate for governor, has proposed assessing higher property taxes on data centers and using the extra revenue to lower taxes for other property owners. Sepp said those kind of proposals lead to economic distortions. “All businesses should be treated as equally and uniformly as possible when it comes to the tax code,” Sepp said during an interview with Radio Iowa. “Saying that: ‘You have to pay a higher tax rate because your business is out of political favor right now,’ is setting up a dangerous situation.”
Sepp argues data centers are critical to the operation of other businesses, including farming operations that depend on internet access to run equipment. “Candidates for governor, for US senate, for state legislature need to understand that tax fairness begins by not discriminating against a given business by what it’s producing,” Sepp said.
The National Taxpayers Union has authored two papers which call on policymakers to ensure “an accurate, neutral, and fair analysis of data center developers” and the impact the facilities may have on electricity and water resources. “Hopefully our research can demonstrate that politicians on both sides of the aisle can come together and create a sensible policy that treats local communities right, addresses the concerns of citizens, but also sets up the state for success going forward,” Sepp said.
The National Taxpayers Union is calling for reforms to speed up the process of construction permits. The group says policymakers should consider letting data center companies build and operate their own electric power systems. Sepp said data centers can “lift the local property tax base to healthy levels” and also provide in-person and remote jobs that pay well. The Technology Association of Iowa estimates about 9000 people are currently employed by the 100 or so data centers already operating in the state.