COLUMBUS, Ohio — A controversial sales-tax exemption for data center operators in Ohio, benefiting tech giants like Amazon, Google, and Microsoft, could result in significant revenue losses for state and local governments. A new report by Policy Matters Ohio reveals that the tax break if applied to recent investments announced by these companies over the past two years, could cost nearly $1.6 billion in lost sales-tax revenue.
“The Ohio General Assembly needs to rein in this huge giveaway,” said Zach Schiller, the report’s author and research director for Policy Matters Ohio. He emphasized the urgency of the matter, noting that data centers are enormous electricity consumers, potentially driving up utility costs for Ohio residents and businesses while posing challenges to climate change mitigation efforts. “Why should Ohio provide massive subsidies to some of the wealthiest corporations when the result could be higher costs for Ohioans?” Schiller added.
Modest Job Creation, Steep Costs
Data centers are not major job creators, with state subsidies often exceeding $1 million for each job generated. Despite the large financial incentives, a Microsoft executive recently stated that tax breaks rarely influence site selection decisions. Yet some agreements with companies extend the sales-tax exemption for decades—for example, Amazon’s deal stretches until 2055, locking in the state’s commitment long-term.
The report urges the Ohio General Assembly to eliminate or at least impose strict limits on the tax break. Critics argue that the current policy sacrifices substantial public funds while generating minimal economic returns. Recent exemptions for companies like Google and Meta are estimated to cost Ohio $1 million per job created, further fueling calls for reform.
Energy Demands and the Nuclear Debate
The growing number of data centers in Ohio raises additional concerns about energy consumption. Microsoft, for instance, is building a $420 million, 245,000-square-foot data center in New Albany, projected to employ at least 30 full-time workers with an annual payroll of $1.5 million. While some tech companies, such as Amazon, have turned to renewable energy like solar farms in Ross County, others are exploring nuclear power to meet their energy demands.
Microsoft’s agreement with Constellation Energy to source power from the Three Mile Island nuclear plant has reignited debates about nuclear energy in Ohio. Activists have expressed strong opposition, citing the dangers of radioactive contamination, the long-term challenge of nuclear waste storage, and the catastrophic risks of reactor failures. Memories of the 1979 partial meltdown at Three Mile Island—where radioactive gases were released into the atmosphere—remain a cautionary tale for many.
Meanwhile, companies like OKLO are advocating for nuclear energy as a solution to data centers’ energy demands, with plans to build two experimental reactors in Pike County. This proposal has sparked further debate, as environmental advocates push for a shift toward sustainable energy sources like solar and wind.
As Ohio grapples with balancing economic development, environmental responsibility, and public safety, the future of data center tax breaks and energy policies will remain a contentious issue.
