(The Center Square) – An expansion of data center sales tax exemptions in Wisconsin is meant to “treat all businesses the same,” according to Rep. Shannon Zimmerman, R-River Falls.
Assembly Bill 245 would expand the server computers eligible for the tax exemption from networked computers that are linked together to include individual standalone computers at a site.
Right now, Ark Data Centers in the Village of Harrison near Appleton is pushing for the bill but Zimmerman said “we will see a number of these in the months to come.”
Ark Chief Executive Officer John Kehoe, the lead lobbyist for the bill, said that he thought the original data center sales tax exemptions, enacted in the 2023-25 budget, would apply to Ark. Bill sponsors said the same.
Kehoe said that Ark’s data center location is currently empty as companies show interest in the state but then do not continue to take out a 5- to 10-year lease to share space at Ark’s facility because they want the sales tax breaks.
Kehoe said that most companies would be spending between $10-$50 million, meaning a sales tax exemption between $600,000 and $3 million from Wisconsin.
Sen. Julian Bradley, R-New Berlin, and Assembly Speaker Robin Vos did not immediately respond to questions from The Center Square regarding the benefits of the sales tax exemption and other tax breaks for data centers.
U.S. Rep. Tom Tiffany, R-7th Congressional, is now running for Wisconsin governor and said that he is concerned with Wisconsin’s energy supply with so many data centers coming online.
“I’ll never forget, 30 years ago you would see those rankings where Wisconsin was among the lowest cost electricity producers in the Midwest,” Tiffany said. “We were like No. 2. Now we’re the second highest here in the Midwest.”
The current exemption has led to $70 million in forgone sales tax in its first two years, exceeding Department of Revenue estimates.
The sales tax exemptions are good for equipment, construction materials, electricity and more at qualified data centers in the state.
Many of the usually benefits of a business entering the state – property taxes, sales tax and employment – have already been conceded by the state while questions remain about the impact of energy and water use at the facilities.
Wholesale electricity costs have increased as much as 267% from five years ago in areas near significant data centers, according to an analysis from Bloomberg.
