The usually reliable WSJ got this story mostly wrong:

In reality the billions of dollars of state sales tax exemptions for capital purchases are standard procedure for manufacturing and farming and construction and almost every other business.

The Tax Foundation explains this is tax policy 101: “Servers and other data center equipment are exempt from sales tax in most states, consistent with the principle of avoiding the taxation of business inputs.”

As an example, when we at UP visited a Virginia data center, we saw a lot of Caterpillar equipment. Farmers and factory owners don’t pay sales tax on these items, why should a data center?

There may be some cases where tech firms get special tax breaks, but they are the exception, not the norm. The real story is that when Google and Amazon and Microsoft build data centers they contribute massive local taxes.

The real story is the prodigious tax dividend paid by most data centers. In Loudoun County, Virginia the data centers pay an estimated $1.3 billion in property taxes, which is 40% of the county’s budget.

When tech companies do appeal for special state/local tax breaks, we oppose these handouts. They only cause a taxpayer backlash. Counties shouldn’t offer them and big tech shouldn’t seek them.

But the bottom line is that data centers pay MORE than their fair share in taxes.