>> Per the report, the package of tax breaks and incentives was achieved through local officials bound by nondisclosure agreements, quietly struck legislative deals, and parliamentary sleight of hand to avoid public scrutiny of the deal.
>> So the residents of Richland Parish did not have much of a heads-up on what was coming.
No voting, no public interests, only closed-door politics.
> >> So the residents of Richland Parish did not have much of a heads-up on what was coming.
> No voting, no public interests, only closed-door politics.
This is exactly what NIMBYs say about attempts to build housing; and resisting efforts on the part of local people to exercise political pressure against proposed housing development projects is a core component of YIMBYist activism. If it's possible for local activists to be short-sighted, self-interested, or straightforwardly wrong when they exert political pressure against housing developments, then it's also possible for them to be similarly wrong about data centers, or any other built structure that someone, somewhere has a problem with.
but there will be voting; all of the elected officials will have to face elections at some point, and voters can put their feet down right now: everyone is voted out.
That is how everyone decision works, yes. That's why you want limited government. Voting where you can't vote with your money is a very low-quality, delayed signal.
If you assume that decision makers operate entirely in silo from their constituents then yes, that's how this works. Howver if you are operating in the normal mode of democracy where decision makers consult impacted parties through town halls, solicited feedback, subcommittees, etc etc then there are ample opportunities to obtain high-quality, low-latency signals. "Voting with your money" is (IM personal O) a scapegoat for government leaders to avoid doing their due-diligence (not to mention the massive imbalance that results form people with lots of money 'voting' way more than people with less money).
The blinders on people about these things is insane. I'm in Arizona. We are having a water crisis but they are building data centers and oat milk factories. WTF?
The irony is that beef and cattle feed use vastly more water than oat milk production. Oat milk would help reduce water use if its used as a substitute for dairy.
> Hyperion will be exempt from state and local sales and use taxes on its data center equipment for the next 20 years, which includes the GPUs that train and develop AI models. Sherwood News estimated that since the state’s combined state and local sales tax stands at 9.56%, spending the roughly $35 billion for the GPUs of the center will hand the firm about $3.3 billion in tax breaks.
It's tempting to blame any political outcome you don't like on lobbying. It allows you to believe that almost no one supports the outcome that you don't like it, because you can blame it on politicians manage to be bought by a small number of lobbyists. But it might not be the case. Several states (I believe Texas, Georgia, and Indiana) don't charge sales tax to data centers. So from Louisiana's perspective, the alternative to the tax break might not be $3B in tax revenue, but $0 (as Meta would simply build elsewhere). I'm sure they still plan to collect income taxes for the temporary jobs created for the construction of the data center, and of the permanent jobs required to maintain it.
If states all worked together, they could plausibly prevent this race to the bottom by agreeing on a universal sales tax minimum, but there are many obstacles to that as well besides some vague sense of "lobbying". You'd want all states to work cooperate on their minimum tax, but every state has a big incentive to break from the cartel and offer lower taxes in exchange for getting all the datacenters built there. There are lobbyists who are working against this, but it's not just meta and google, it's also local utility companies and construction/trade unions (who all want their state to defect and be the one to get all the new money and jobs)
Well said: why does a tax break bother people so much? That feels pretty populist to me: data centers of this magnitude offer a ton of economic benefits to the area and the state, 3.3B in tax breaks are the price to pay to incentivize them to bring the business to the area, which will then provide a net positive financial benefit. I can see plenty of problems with data center construction that should definitely be addressed, but why do you think states offer such huge incentives?
But it's not less in local coffers. If the incentive was not given, the datacenter would not be built there. The state government wants it to be built there to increase economic activity in their state.
Residents aren't paying more for anything and no services are being cut.
There are 50 states in the US and plenty of other locations to build datacenters. "Still needing the datacenter" isn't a reason to build it in this specific location. It's ok to just admit you were wrong.
> There are 50 states in the US and plenty of other locations to build datacenters.
Yes, and we should ban them from issuing these sorts of race-to-the-bottom sweetheart deal at taxpayer expense to trillion dollar corporations to address that.
I find it bothersome because the system incentivizes giant megacorp monopolies. If you are small you'll have to pay taxes like everyone else, but once you hit some threshold of huge enough, we'll let taxes slide so you can get another leg up. A datacenter this size isn't going to provide more economic benefit than 50 datacenters 1/50 the size, but only one of them gets special treatment.
Combine that with the fact that large corporations constantly find ways to avoid paying taxes and its hard to be positive about this kind of thing.
> Well said: why does a tax break bother people so much?
Several reasons. It distorts the market for one. One tax rate for me, another for thee. That's government picking favorites. Generally regarded as a bad thing.
I'll bite. What's the downside of a flat tax for a category like datacenters? If Meta want's to negotiate a lower tax rate for datacenters that's great, just allow every datacenter to apply for that same rate then.
Because its my money, paid to rich people, to make them richer. There's no obvious "net positive financial benefit" in many of these situations, and even if there was the impact they make is not just in financials, but in utility management, environmental management, etc - its not just a magic number go up.
>data centers of this magnitude offer a ton of economic benefits to the area and the state
I have only seen this point being brought up by the exact people that will be owning the data centers with little data to back it up besides temporary construction jobs and few long term jobs, most jobs likely imported and not local.
I think states are offering huge incentives because the politicians approving the construction and tax cuts are easily bought out for pennies on the dollar. I don't know if Louisiana is known for being a paragon of honest politicians doing right by their constituents.
I think there are plenty of issues with data center construction but there are real economic benefits here. If there weren’t it would be pretty easy for states to thwart them. You would see the leverage switch and companies paying states incentives.
This assumes that the legislators and regulators who approve projects like this are motivated by economic benefit and not by campaign donations and other favors.
But I don't see what other options are available for states to compete with each other if not through tax breaks.
Edit: I suppose if you ban tax breaks, if a state wants to be competitive, they still can but through modifying the tax code for everyone instead of giving certain people exceptions. That doesn't seem like a terrible alternative..
The other option is to not offer the tax breaks and if the company wants to build a data center, they also need to pay the taxes for it. If a state is dumb enough to offer tax breaks that's on them.
There's also not "competition" here. It isn't as if data centers have almost any positive local effects, beyond their property tax revenue. They have very few employees and if the property tax is cut they ultimately don't generate any income for the locality.
I can tell you that as someone living in Idaho, I see no differences when I work with the datacenters in Oregon, Washington, or Utah. I'm not benefited in the slightest by the few Idaho datacenters that I interact with currently.
It's the same argument that's been used to give sports stadiums sweetheart deals. These things have almost no local benefits and a lot of negative side effects with their presence.
> But I don't see what other options are available for states to compete with each other if not through tax breaks.
They should compete based on actual policy including tax policy. "Tax breaks" for specific projects are just unfair and a quick race to the bottom. Instead, areas should be required to treat all entities equally. Even tax breaks for specific industries like tv/film production are unfair but at least industry wide tax breaks treat individual entities more fairly.
If a state's taxes are too high to attract investment, then they should have to lower taxes for everyone (of the same type).
> exempt from state and local sales and use taxes on its data center equipment for the next 20 years
That said, the real issue IMO is that "use taxes" are just absurd to start with. Why should a random city/town be taxing products neither made nor sold in their jurisdiction. If anything, the sale of the datacenter product/services should be taxed but the external inputs "imported" from other states or countries is crazy to tax.
Again, I will die on the hill that a land value tax makes this all very simple. A LVT is the perfect strategy for extracting public value from data centers since electricity & water availability is a major input to a lands value.
The important consideration is whether states are competing for community benefits truly worth the bids made as tax breaks or whether the competition is just among politicians leveraging their personal control over tax breaks towards private benefit as power brokers.
> But I don't see what other options are available for states to compete with each other if not through tax breaks.
Federal ban on tax breaks for companies over a certain market cap?
Why can't they compete on "we have a good regulatory setup" or "we have good schools for your employees" or "we are a nice place to live"? Why compete on "we'll soak or own taxpayers more than the next state over so you can make even more obscene profits"?
The endgame of competing with lower taxes is handing out $99 in incentives to get $100 of mobile corporate spending in your area. The only winners are the corporations. There needs to be a collective spine.
Do datacenters really require good infrastructure? Given they are planned all around I suspect that’s not really the case. I’m also not convinced university or the quality of labors are strong arguments. Aren’t those datacenters made fairly cheaply and full of automation?
A datacenter complex provides basically none of those things to a state, beyond capital in the form of taxes. But if the state gives tax breaks, then there is no benefit to the state for having a giant warehouse draining its electricity supply and/or polluting its air.
Why do you see data centers as "energy parasites"? They are basically the best customers of the grid possible - consistent high usage. This is an opportunity for the US to pursue energy abundance and grow the economy. The only issues these cause is when states make it impossible to deploy more energy.
Anti growth environmentalism is so toxic when we could just be pursuing wide spread clean energy and growth.
This is a truly delusional take. A high-consumer that needs constant input provides zero benefits to its neighbors. If datacenter providers want to benefit the grid, they ought to build clean energy production sufficient for their needs and then some as a prerequisite for approval. That would be beneficial to everyone.
> Entergy plans at least three new combined‑cycle gas plants totalling ≈2.26 GW specifically to serve Hyperion, with additional plants in the wider “AI build‑out” pipeline.
What's the value add for states and cities? data centers don't create a lot of long term jobs, the skills required are highly specialized and will probably hire out of state. the construction itself will likely hire locals but that can't go on forever. these centers are loud, increase power costs and water usage.
feels like short term job creation program at best.
Not as much as you'd think. Power plants are heavily automated. A complex nuclear plant may provide a couple hundred; a big solar farm might need a dozen or two maintenance staff.
right my point is these are 1 time investments, locals will be dealing with the consequences and most of the workers will just leave after the job is done.
For those who are unaware, construction of this datacenter has so far been an unmitigated disaster for the community and a fantastic example of how few shits companies like Facebook give when it comes to cutting corners vs. spending money to do things more safely. To say they aren’t taking the community into consideration is an understatement.
They averaged 7 crashes a month near the site at the time of this article. The community isn’t even 2000 people. They’d had 1 fatality already by the time this article was written as well.
Now if they can actually do something with AI that is meaningful? I assume Mark is trying to reach for like some crazy goal instead of just getting reasonable products to market. I've known the type of person who chases the stars instead of just taking their time, building up the core and then snowballing into greatness.
He's the #1 advocate for virtual AI "friends". What CEO wouldn't like hundreds of people telling him he's right all the time? Meta will probably be the first company to have an AI board member.
It's actually kind of amazing that (apparently, but I'm willing to be wrong) AI has resulted in more people getting banned (rather than less, which you would think. You would think AI makes this easier to filter out, search for problem accounts, whatever)
Like, the problem was always the asymmetry. Can FB police everything? Probably not. Should they be able to operate at scale if they can't? Unclear. Section 230 blah blah platform not responsible for things users post
But YOU sure get banned. At any time for any reason. When you then "report" (that button does... what, exactly?) an actual problem, platform happily tells you no community standards were violated.
I think that this is one of the cases in which the Fed government should use it interstate commerce clause to prevent the states to compete until rock bottom. The EU has some regulations that forbid state help to private enterprises and they do seem to have some teeth. Nothing wrong with different states having different tax rates, but states should not be allowed to have favorite companies and kill competition.
At this rate, it's almost an equal public-private cooperation - which would actually make more sense as it would give the public ownership over datacenters instead of creepy tech bros.