Did You Know Data Centers are Sales Tax Exempt in Georgia?

I was recently told there were more than 180 active data center proposals across Georgia and wondered why Georgia was such a magnet. There is an interesting article in the Wall Street Journal that claims over one trillion dollars is being invested in data centers, although not just in Georgia.

A conservative ROI (Return on investment) of even 1% would suggest an annual return of tens of billions of dollars on this trillion-dollar investment, if accurate.

In 2018, Georgia enacted House Bill 696, which creates a sales tax exemption that covers a portion of construction materials and purchases of computer servers and related equipment from state and local sales and use tax.

Now to be clear, our state leaders did not just exempt these data centers from the 4% of sales tax which goes to the state, but also all local sales tax additions that result in our 7 – 8% rate. That is a significant loss of sales tax, SPLOST and ESPLOST revenue given the scale of equipment purchases involved.

There is a considerable level of opposition from a large cross section of citizens to ANY data centers, never mind 180+ data centers, it is reasonable to wonder what the legislature thought data centers would bring to Georgia.

While there might be transitory construction jobs, these data centers do not need many people to operate, so jobs were not a focus. Estimates of water and electricity usage suggest a significant drain on already challenged resources, so that cannot be a benefit. The property taxes on finished data centers will be nickels in comparison to consumption. 

I think it is reasonable to wonder why anyone thought unleashing this plague of data centers which will cement over significant portions of Georgia and consume its resources without any meaningful or measurable benefit was a promising idea.

There will be an income tax benefit to the state coffers. The percentage of income earned by the corporate group is allocated to Georgia based on sales within Georgia over Sales everywhere. In the case of Microsoft’s Tyrone project, a tiny sliver of Microsoft’s taxable income would be allocated to Georgia’s income tax coffers. Whether any of that will fall to Tyrone or even Fayette County is unclear. 

It is telling that none of the proponents of these data projects have touted even one benefit or advantage for their proposal. Why would any person approve of these projects, never mind changing zoning from rural conservation all the way to data center as Project Sail did? 

For example, when the Everton and Cresswind homes were approved, the land needed to be annexed to Peachtree City. The PTC council extracted the costs of extending MacDuff Parkway and the bridge across the railroad tracks. The cost was a few million, but I think the builders made out just fine. The fact that no one is talking about any benefits from these projects given the potential income is yet another reason to vote no.

There is activity in the legislature to sunset these laws early to try to shut off the faucet after 180+ projects have already applied. But until then, our county leaders can vote no, hell no, and absolutely no.