Wisconsin taxpayers have spent $70 million in the last couple of years to subsidize the construction and operation of data centers.
That’s because a provision in the 2023-2025 state budget created a sales and use tax exemption for these things. The exemption is broad, covering everything from computer hardware and software to office furniture. And that $70 million is only the beginning, as massive data center projects are popping up all over the state. Even the cost to the state over the last two years, before a lot of this really heated up, well exceeded the fiscal estimate.
This provision was passed by the Republican Legislature and signed into law by Democratic Gov. Tony Evers. So, it was bipartisan boosterism.
But here’s a question: why?
Amazon, Microsoft and Google can afford to pay a sales tax on their desks and carpeting. Nobody picks a site for a data center based on the rounding error that is a state sales tax. They pick the site based on factors like availability of land and water and the cost of electricity.
And all of those things also have big community impacts. Local residents rightly worry about the toll on farmland, their water supply, utility rates and the character of their communities. It’s one thing to deal with these big, disruptive projects as they try to gain local approval. It’s quite another for the state to needlessly encourage them with a tax break.
Now, let me emphasize right here that I am no Luddite when it comes to artificial intelligence. In fact, I’m relatively bullish on it. When I wanted to learn more about this tax exemption, I used AI to come up with answers to complex questions that would have taken me hours to research on my own. So, I believe AI will make us incredibly more productive and productivity leads to greater societal wealth.
Of course, that wealth won’t be distributed equally. It never is. Some people will lose their jobs or not have jobs to grow into, but new jobs will be created. It’s impossible to predict exactly what will happen, but the overall thrust will be positive. That’s the story of technological advancement since the invention of the wheel. If you want to go back and live in the Middle Ages, be my guest. Before you go make sure you’ve packed your blood-letting kit.
And yet, society can exercise some limited control over how this plays out. Local communities don’t have to allow data centers to be built there. Maybe some guard rails on AI’s use can be put up here and there. But it’s a fool’s errand to try to stop this speeding train. And I think the general negative view of AI is flat out wrong. Its benefits will far exceed its costs.
But one of those costs does not have to be millions of dollars in lost state and local sales taxes. There’s little doubt that this exemption will cost us over $100 million a year in the future. Wouldn’t you rather spend that on something else? Maybe affordable child care?
These needless tax breaks should be repealed.
Yellow Stripes & Dead Armadillos 
I was all set to agree with you until you used the standard blah arguments trotted out by all “centrist” writers/thinkers that always state the jobs left will be offset by the jobs created so no worries man! Never mind that that is not true, you have no examples of these nebulous potential jobs, or that they might be located far away from where the current job being ruined is located. Then you state if you are skeptical of A.I. that you’re a Luddite who wants to go back to the Middle Ages. Sure, real solid argument there I felt so convinced. I guess the Middle Ages were the last time we didn’t have A.I. summaries pop up in a search engine query instead of Wikipedia…wait, no that was like 3 years ago. I’m not saying A.I. isn’t going to happen and that it won’t be a net good someday. But people are right to be skeptical now and your arguments, though condescending and rote, are not at all convincing. They might be repeated over and over by our vaunted “public intellectuals” on the center left and the opinion pages of all the still existing mainstream newspapers but they still lack substance and don’t convince people after being told for decades that “free” trade and “social” media were worth the trade offs too.
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Every major change in technology has been greeted with predictions of doom — some of which come true. There are certainly dislocations and if it’s your job being dislocated I can understand why you wouldn’t be happy about it. But in the big picture, these things are almost always good because they make society as a whole more productive, productivity leads to wealth and wealth ends up improving everybody’s quality of life. There’s no reason to think AI will be any different.
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