Republican lawmakers have been circulating legislation to expand a sales tax exemption for data centers.
Rep. Shannon Zimmerman, R-River Falls, and Sen. Romaine Quinn, R-Birchwood, last week sent a co-sponsorship memo to other legislators seeking support for the legislation. The proposal would extend the tax break from last session to data centers that may house a group of individual server computers that are owned by more than one business entity.
The lawmakers note the current sales and use tax exemption applies to data centers where a single owner, lessor or operator owns the server computers there. These typically serve a single user such as a large company, and are sometimes called “hyperscale” data centers.
In other cases, data centers lease out their computing power to business clients, which “effectively operate as tenants” of the computers, authors wrote. These data centers often cater to small and medium-sized businesses.
The lawmakers say offering the tax incentive to these kinds of data centers, the state will “have a greater opportunity to secure investments and economic activity” generated by these projects.
“Data centers create high-paying jobs and support upgrades to utilities and fiber network infrastructure,” they wrote. “It is critical for Wisconsin to not fall behind the competitive environment for data centers.”
The current tax exemption, certified by the Wisconsin Economic Development Corp., includes several criteria including a minimum qualified investment in the state over a five-year period. That amount is set at $50 million, $100 million or $150 million, depending on the population size for the county where the data center is located, the memo shows.
Along with modifying the law to say qualified data centers can include a group of individual server computers, as well as a group of networked computers, the bill has a provision related to cryptocurrency, analysis by the Legislative Reference Bureau shows.
Under the legislation, WEDC wouldn’t be able to certify any buildings for the data center tax exemption that “are used for or to facilitate the creation of cryptocurrencies” or the process of verifying and securing related transactions.
See the memo.
