>> 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.
Yet another moment where Strangers in Their Own Land[0] is prescient.
From an interview[1] given by the author:
"I think the next most important reason they distrusted the federal government is their experience with protective agencies in the state of Louisiana, and they thought, “Gosh, these are a lot of people we pay taxes to but they don't really protect us.” And they’re right, because Louisiana is an oil state - that was a big discovery for me - and it outsources, in a way, the moral dirty work to the state. So, the state actually pretends to protect the citizenry from hazardous waste and pollution of air and water and ground, but it doesn't actually protect it very much. It gives out permits, as one Tea Party person said "like candy." And so, they felt the federal government is just a bigger, badder version of a state government which isn't protecting us. So, they'd had bad experience. They’d been burned, and I think that's the second kind of source of resistance to the government. But the third is that they saw the government as an instrument of what I'll call “the line cutters.”"
There was a public hearing of the state public service commission I attended which essentially boiled down to well all these big Wall Street banks are guaranteeing payment so it should be fine and plus we need jobs up there.
I'm not at all surprised to learn that Republican politicians royally screwed their constituents. I was going to say maybe these people will vote better next time just to read that Colorado governor is commuting the sentence of Tina Peters. Democratic leadership is so freaking weak it's unbelievable. With one party full of grifters and the other with full of weaklings, we need to abolish this two-party system.
Which is what we keep electing so boohoo. I'd like to be less pessimistic but people are irredeemably irredeemable. I am hugely pro-AI, but the tech bros need to channel more Ronald Reagan* and less f**ing Homelander or this ends very badly for everyone.
*And I hated Ronald Reagan at the time
Now bring me some downvotes to show me the error of my ways... Thank you for restoring my lack of faith in humanity...
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.
And then those companies can give them their due ~~bribes~~ totally free and unrelated gifts out of the goodness of their hearts to such illustrious paragons of American governance, as legalized by the supreme court recently.
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 power imbalance that results from people with lots of money 'voting' way more than people with less money).
> >> 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.
If a real estate developer already owns land and wants to build at their expense on their own land, quite a few people think that, in general, they should be permitted to do so as long as they comply with applicable laws.
But this set of tax breaks is modifying the effect of the applicable laws (namely sales and use tax, according to the article) for the benefit of a landowner. That seems rather different.
There's a lot of ground between gifting $3.3 billion in tax incentives to a megacorp for a short-term increase in construction employment and allowing a homeowner build a second dwelling on their lot.
Incidentally, that same $3.3 billion could build around 10,000 accessory dwellings in Baton Rouge.
What are the details of the tax incentives? Some are "real loss" (e.g., the area produced $10k a year in property tax before, and now produces $0) and others are "lost future taxes" where it produces nothing now, and now will produce nothing for 10/20 years (this is the type often used to convince Walmart to build here rather than there).
There's a huge difference between extremely publically pushing for laws that allow buildings to be built vs private negotiating tax breaks that only affect a singular building.
Jobs that exist only during construction, ambient noise, higher electricity and water prices. They also get the privilege of living near technology that represents the future: degraded education, unemployment and spiraling inequality.
I'm not that cynical, I think they got stars in their eyes, were charmed at the idea of doing business with big money / tech and didn't do any actual cost/benefit analysis. Maybe they get an opportunity to make a very powerful friend/crony and took it without considering their duty to their constituents.
> 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. [1]
> 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, 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.
Long-term tax-breaks for something like a factory, which will ideally employ hundreds or thousands of people for a very long time? That can make sense. There's a lasting, local benefit, and that benefit can stand some encouragement. Real, local people will have real, local jobs. It can be good.
Datacenters aren't like that. There's a huge construction phase where billions of dollars get spent followed by dozens of long-term employees. The local benefit is mostly just a flash in a pan while the tax break lasts for decades.
Besides, it seems that datacenters are universally unliked by constituents in areas where they pop up. This makes arguments for tax breaks for datacenters seem illogical, at best.
Unilaterally, these favorable arguments come down to something like: "Well, if they didn't offer the tax break here, then Metazonaigoog will just build their new datacenter somewhere else instead!"
To which I can only retort: "Really? You promise? Don't threaten me with a good time -- go ahead and build it somewhere else."
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.
It wouldn't be a problem if 1) people get a say in the matter and 2) those tax breaks don't require increasing taxes else where. So far with all the data centers built that does not seem to be the case.
"If states all worked together, they could plausibly prevent this race to the bottom by agreeing on a universal sales tax minimum"
The states, under Trump, are all working together to ensure a race to the bottom happens, both in the U.S. and abroad.
One hundred and thirty five nations worked together to create a minimum corporate tax rate called "Pillar Two". It would have factored in tax breaks for projects like this by calculating an effective tax rate for Meta, and mandated higher taxes if the effective rate was too low. Trump withdrew the U.S. from that effort and created a framework to retaliate if other countries upheld Pillar Two to raise taxes on American megacorps[1] in their jurisdictions.
Well, now you see the issue. It only takes one hold-out for the plan to fail. The federal government could pass a law to at least ban it within the US, but the federal government can't seem to pass any laws right now.
Asking for evidence of claims is very offensive to those who don’t have any.
They feel very strongly about a topic, but it’s entirely based on their various personal experiences. They arrive at the conclusion first, and then try to arrange reality around their opinions.
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.
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.
After Meta in Louisiana, Amazon is currently building 3 separate data centers across Shreveport-Bossier. Have to imagine they are receiving the same treatment. I’ve driven by the Bossier Parish grounds and the cleared land alone is massive. Each are expected to be 2-3 million sqft.
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.
Again, that's no sweet off my brow. It's not as if working with a datacenter in canada, mexico, or Ireland is all that different from one in the US. Especially when you start talking about what these are being used for, LLMs. The added latency for a datacenter being in China has zero impact on how I use it.
There also isn't some magical expertise loss from these datacenters not being local.
About the only risk is that the various governments become so hostile to people in the US using their datacenters as to apply taxes and fees on usage. Which is unlikely to say the least. The owners of these datacenters want them used and if they can convince a government to give them preferential treatment they can likely convince the same government not to tax their clients.
I guess there is also the risk of the government spying on the incoming and outgoing prompts. But lets be really real here, that's unlikely to matter to almost anyone other than people working for our government.
> 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.
> 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 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.
The big companies have the cash for this by avoiding paying tax in the first place, then, in the areas where they’re spending money like capex and have to pay tax, they pull moves like this to further avoid them.
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?
I answered a general question. And datacenters require quite a bit of infrastructure - roads, power lines, cheap electricity, abundant water. And if they don't use labor, then there is no reason to want them in your state anyway.
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.
The big Meta data center in Louisiana is paying $30 million property taxes to a county that is collects $22 million a year in taxes. It pays tons of money to the utility for power. Utilities should just build more generation to serve demand and everyone wins.
The part of this that is broken is we’ve made it way too hard to spin up more power in this country. Growth can be good for 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.
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.
It’s so dangerous the local school has shut down their playground despite being a mile away. If kids being unable to have a basic outdoor recess isn’t enough to make you care I don’t know what will.
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 stopped using Facebook because they nearly banned me because their AI was too stupid to notice a joke comment. I was working for Red Lobster corporate at the time, and was the admin of the Facebook app, so if I had gotten banned, it would have been a mess. So I flat out stopped using Facebook. I maybe log in once in a blue moon, then log back out. I appealed the strike, then not even 5 minutes passed, I was denied. I don't even remember being able to explain why what I said was not worthy of a warning, but honestly, screw em. I don't even need it for work anymore, but I'm never going back to that dystopian shell of social media.
I do hate it though, Mark has meaningful funding to build some actually useful AI, hell if he started bottom up, he can have his anime waifu he wants.
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.
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.
From https://sherwood.news/tech/hyperion/
>> 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.
Yet another moment where Strangers in Their Own Land[0] is prescient.
From an interview[1] given by the author: "I think the next most important reason they distrusted the federal government is their experience with protective agencies in the state of Louisiana, and they thought, “Gosh, these are a lot of people we pay taxes to but they don't really protect us.” And they’re right, because Louisiana is an oil state - that was a big discovery for me - and it outsources, in a way, the moral dirty work to the state. So, the state actually pretends to protect the citizenry from hazardous waste and pollution of air and water and ground, but it doesn't actually protect it very much. It gives out permits, as one Tea Party person said "like candy." And so, they felt the federal government is just a bigger, badder version of a state government which isn't protecting us. So, they'd had bad experience. They’d been burned, and I think that's the second kind of source of resistance to the government. But the third is that they saw the government as an instrument of what I'll call “the line cutters.”"
[0] https://en.wikipedia.org/wiki/Strangers_in_Their_Own_Land [1] https://www.loe.org/shows/segments.html?programID=18-P13-000...
Man, "instrument of the 'line cutters'" describes my government to a tee and I live in one of the wealthiest states.
There was a public hearing of the state public service commission I attended which essentially boiled down to well all these big Wall Street banks are guaranteeing payment so it should be fine and plus we need jobs up there.
I'm not at all surprised to learn that Republican politicians royally screwed their constituents. I was going to say maybe these people will vote better next time just to read that Colorado governor is commuting the sentence of Tina Peters. Democratic leadership is so freaking weak it's unbelievable. With one party full of grifters and the other with full of weaklings, we need to abolish this two-party system.
Does the commutation of Tina Peters' sentence have anything at all to do with this situation?
Don’t worry, if you take a step back it’s been a one party system for decades already.
Louisiana had a Democratic governor from 2016-2024.
Which is what we keep electing so boohoo. I'd like to be less pessimistic but people are irredeemably irredeemable. I am hugely pro-AI, but the tech bros need to channel more Ronald Reagan* and less f**ing Homelander or this ends very badly for everyone.
*And I hated Ronald Reagan at the time
Now bring me some downvotes to show me the error of my ways... Thank you for restoring my lack of faith in humanity...
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.
And then those companies can give them their due ~~bribes~~ totally free and unrelated gifts out of the goodness of their hearts to such illustrious paragons of American governance, as legalized by the supreme court recently.
When the damage is already done?
It's okay, as the on-going damage continues Americans tend to be well armed enough to go on a few rampages here and there.
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 power imbalance that results from people with lots of money 'voting' way more than people with less money).
What negative consequences does being unelected have?
That's already factored in the cost of doing business for them.
> >> 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.
This is a strange comparison.
If a real estate developer already owns land and wants to build at their expense on their own land, quite a few people think that, in general, they should be permitted to do so as long as they comply with applicable laws.
But this set of tax breaks is modifying the effect of the applicable laws (namely sales and use tax, according to the article) for the benefit of a landowner. That seems rather different.
There's a lot of ground between gifting $3.3 billion in tax incentives to a megacorp for a short-term increase in construction employment and allowing a homeowner build a second dwelling on their lot.
Incidentally, that same $3.3 billion could build around 10,000 accessory dwellings in Baton Rouge.
What are the details of the tax incentives? Some are "real loss" (e.g., the area produced $10k a year in property tax before, and now produces $0) and others are "lost future taxes" where it produces nothing now, and now will produce nothing for 10/20 years (this is the type often used to convince Walmart to build here rather than there).
What back-deals are yimbys doing?
There's a huge difference between extremely publically pushing for laws that allow buildings to be built vs private negotiating tax breaks that only affect a singular building.
So, the massive tax breaks that were given at the expense of the residents...how do you explain that away?
What's are the positives for local communities for data centers? I see only negatives. At least prisons have to hire people.
Jobs that exist only during construction, ambient noise, higher electricity and water prices. They also get the privilege of living near technology that represents the future: degraded education, unemployment and spiraling inequality.
You're forgetting insane levels of air pollution and a measurable increase in ambient temperatures.
I believe in Richland Parish people were excited about the opportunity to sell hot plates to the construction workers.
Higher energy prices. Oh, you mean net positives? I can't see any unfortunately..
The local officials get slightly richer.
I'm not that cynical, I think they got stars in their eyes, were charmed at the idea of doing business with big money / tech and didn't do any actual cost/benefit analysis. Maybe they get an opportunity to make a very powerful friend/crony and took it without considering their duty to their constituents.
Maybe but also
> 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. [1]
[1] https://sherwood.news/tech/hyperion/
> 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.
If they are willing to spend 35B there's no doubt they could spend 30B without asking the government to reach into the people's wallet.
The US needs to do something about lobbying. It seems too late already, but maybe you can get things to improve a bit.
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, 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?
> Well said: why does a tax break bother people so much?
Because it's their money being handed to a trillion dollar company that has no need for a discount?
A tax break isn't handing anyone money.
Sure it is. It's more money in Facebook's pocket, and less in the local coffers. Either services get cut, or residents pay more.
If the IRS gives me a 10% tax break, I have more money, and the government has less, right?
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.
> But it's not less in local coffers.
The local government is giving a local tax break, which comes out of their local tax revenue.
> If the incentive was not given, the datacenter would not be built there.
Objection, your honor, assuming facts not in evidence!
(Nor are the incentives any sort of guarantee. https://www.cnbc.com/2021/04/21/foxconn-mostly-abandons-10-b...)
> Residents aren't paying more for anything and no services are being cut.
They are receiving less tax revenue than they would have otherwise had to use on their services.
You are assuming the datacenter would be built there without the incentive. That is highly unlikely.
Yes, I'm assuming Facebook still needs the datacenter, and that the company that wasted $80B on the Metaverse can pay some taxes.
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.
Long-term tax-breaks for something like a factory, which will ideally employ hundreds or thousands of people for a very long time? That can make sense. There's a lasting, local benefit, and that benefit can stand some encouragement. Real, local people will have real, local jobs. It can be good.
Datacenters aren't like that. There's a huge construction phase where billions of dollars get spent followed by dozens of long-term employees. The local benefit is mostly just a flash in a pan while the tax break lasts for decades.
Besides, it seems that datacenters are universally unliked by constituents in areas where they pop up. This makes arguments for tax breaks for datacenters seem illogical, at best.
Unilaterally, these favorable arguments come down to something like: "Well, if they didn't offer the tax break here, then Metazonaigoog will just build their new datacenter somewhere else instead!"
To which I can only retort: "Really? You promise? Don't threaten me with a good time -- go ahead and build it somewhere else."
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.
The entire tax code is full of these. For corporations and individuals as well. Are you advocating for a flat tax?
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.
It's not your money. Tax breaks are no ones money. No money is being sent for a tax break.
>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.
It wouldn't be a problem if 1) people get a say in the matter and 2) those tax breaks don't require increasing taxes else where. So far with all the data centers built that does not seem to be the case.
"If states all worked together, they could plausibly prevent this race to the bottom by agreeing on a universal sales tax minimum"
The states, under Trump, are all working together to ensure a race to the bottom happens, both in the U.S. and abroad.
One hundred and thirty five nations worked together to create a minimum corporate tax rate called "Pillar Two". It would have factored in tax breaks for projects like this by calculating an effective tax rate for Meta, and mandated higher taxes if the effective rate was too low. Trump withdrew the U.S. from that effort and created a framework to retaliate if other countries upheld Pillar Two to raise taxes on American megacorps[1] in their jurisdictions.
____
[1]https://www.piie.com/blogs/realtime-economics/2025/how-us-mu...
Well, now you see the issue. It only takes one hold-out for the plan to fail. The federal government could pass a law to at least ban it within the US, but the federal government can't seem to pass any laws right now.
It's funny that the US still uses the word lobbying. At this point this has been corruption for years now. Corruption in the US is rampant
Yup, lobbying is a made-up integrity-washing concept after all
Do you have evidence that lobbying is what produced this outcome?
Please don’t do that.
How dare he ask for evidence!
Asking for evidence of claims is very offensive to those who don’t have any.
They feel very strongly about a topic, but it’s entirely based on their various personal experiences. They arrive at the conclusion first, and then try to arrange reality around their opinions.
This poster likes to demand evidence of others (https://news.ycombinator.com/item?id=48135626) and bristle when the same standard is applied to them (https://news.ycombinator.com/item?id=48137932).
Someone else did provide evidence, though: https://news.ycombinator.com/item?id=48153756
> someone else did provide evidence
Some 16 minutes after he asked the question, so that's not an excuse for criticism of the question.
In what way did I bristle?
It’s the phrasing/tone. It’s such a red flag.
As to his being answered: somebody responding to him in good faith does not suddenly validate what he was doing.
There was nothing wrong or offensive with my phrasing.
I'm surprised that your comment is dead. Apparently there was evidence (https://news.ycombinator.com/item?id=48153756), so I don't see the problem with having asked.
It’s surprising to me as well. Such an innocuous question. Don’t fully understand why people found it offensive enough to flag.
Does Hyperion have to buy GPUs in the state where they deploy them? How does that stuff even work at those scales?
Will the earth’s climate get tax breaks too? What about the people living around these and paying for taxes. What about zero sum game we have here.
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.
Good, now start to question why such a system should continue to flourish and not be drowned violently in a bathtub.
Neoliberalism is a blight upon the world and it has only been around for 50ish years or so. It doesn't have to be this way.
The climate doesn't pay taxes. Unless the people living around them are investing $200 million into a datacenter they would not fall under the bill.
> The climate doesn't pay taxes.
It's more likely to impose them.
So glad to see small companies like this get a leg up.
Seems only fair that we pay our taxes when those are used to subsidize such lofty endeavours.
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.
After Meta in Louisiana, Amazon is currently building 3 separate data centers across Shreveport-Bossier. Have to imagine they are receiving the same treatment. I’ve driven by the Bossier Parish grounds and the cleared land alone is massive. Each are expected to be 2-3 million sqft.
What’s interesting to me is that for you to build a $10B datacenter (or any other business) you are shaken down for over $3.3B.
No one likes to see big companies avoid taxes.
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.
At this scale they ask different countries for tax breaks though
Again, that's no sweet off my brow. It's not as if working with a datacenter in canada, mexico, or Ireland is all that different from one in the US. Especially when you start talking about what these are being used for, LLMs. The added latency for a datacenter being in China has zero impact on how I use it.
There also isn't some magical expertise loss from these datacenters not being local.
About the only risk is that the various governments become so hostile to people in the US using their datacenters as to apply taxes and fees on usage. Which is unlikely to say the least. The owners of these datacenters want them used and if they can convince a government to give them preferential treatment they can likely convince the same government not to tax their clients.
I guess there is also the risk of the government spying on the incoming and outgoing prompts. But lets be really real here, that's unlikely to matter to almost anyone other than people working for our government.
> 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.
> 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 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.
The big companies have the cash for this by avoiding paying tax in the first place, then, in the areas where they’re spending money like capex and have to pay tax, they pull moves like this to further avoid them.
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.
The other winners are whoever the companies is selling goods or services to.
building a ton of renewable power is a pretty good one
data centers could be a great thing for helping with the duck curve and the like, if they can throttle up and down based on energy cost
Infrastructure is a good one. Universities and high quality labor too.
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?
I answered a general question. And datacenters require quite a bit of infrastructure - roads, power lines, cheap electricity, abundant water. And if they don't use labor, then there is no reason to want them in your state anyway.
Universities...for a data center?
Compete for what exactly, in this case?
Seriously. A few thousand construction jobs, short term, and a few tens of jobs long term. For $3,000,000,000 dollars.
First to touch the bottom!
Capital, assets, jobs.
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.
compete for graft, kickbacks, energy parasites.
You know I’m sure this is true on some level but if you think this is all or a majority of the motivation I think that sounds pretty conspiratorial.
Stadiums routinely get tons of public funds and never return the same value to the city.
It's not really a conspiracy, perhaps more a delusion.
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.
> Why do you see data centers as "energy parasites"?
https://news.ycombinator.com/item?id=48123090
> They are basically the best customers of the grid possible - consistent high usage.
The grid exists to serve the populace. It's why we tend to call it a "public utility".
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.
The big Meta data center in Louisiana is paying $30 million property taxes to a county that is collects $22 million a year in taxes. It pays tons of money to the utility for power. Utilities should just build more generation to serve demand and everyone wins.
The part of this that is broken is we’ve made it way too hard to spin up more power in this country. Growth can be good for 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.
https://spectrum.ieee.org/5gw-data-center
Tax benefits, if they exist, should be federal - not states competing.
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.
It’s so dangerous the local school has shut down their playground despite being a mile away. If kids being unable to have a basic outdoor recess isn’t enough to make you care I don’t know what will.
https://lailluminator.com/2025/11/22/meta-data-center-crashe...
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.
You call chatting with AI-influencer chatbot 'friends' un-meaningful ? Don't make little Marky cry. Not after the VR disaster.
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.
You might even get banned for something you were forced to do https://news.ycombinator.com/item?id=24776748 (https://news.ycombinator.com/item?id=24201306)
See, this is why shit like holding his feet to the fire for Dumb Fucks https://news.ycombinator.com/item?id=1692122 matters. I don't care if he was young, he also hacked Crimson reporters. Because what he ('he', assuming he didn't just steal it from the Winklevosses) built early on has evolved into a platform that is many things and fucking broken (https://news.ycombinator.com/item?id=14147719; https://news.ycombinator.com/item?id=6090712) on top of that
I stopped using Facebook because they nearly banned me because their AI was too stupid to notice a joke comment. I was working for Red Lobster corporate at the time, and was the admin of the Facebook app, so if I had gotten banned, it would have been a mess. So I flat out stopped using Facebook. I maybe log in once in a blue moon, then log back out. I appealed the strike, then not even 5 minutes passed, I was denied. I don't even remember being able to explain why what I said was not worthy of a warning, but honestly, screw em. I don't even need it for work anymore, but I'm never going back to that dystopian shell of social media.
I do hate it though, Mark has meaningful funding to build some actually useful AI, hell if he started bottom up, he can have his anime waifu he wants.
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.
doesn’t increasing power usage create jobs?
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.
You're usually better off landing a new Target.
> the construction itself will likely hire locals but that can't go on forever
Does any construction project go on forever?
It’s just a building. Come on.
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.
Isn't LA soon to be underwater
Richland Parish is pretty far north, so not likely to be under sea water.
It is, however, in the Mississippi River delta... so I wouldn't put flooding out of the picture.
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.
The US federal admin is all in the grift. Whoever offers the best kickbacks to the president is the favorite company
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.