Is Kentucky about to give billions in tax breaks to data centers? | Hacker News Reader

Is Kentucky about to give billions in tax breaks to data centers?

kypolicy.org

29 pointspetethomas16 comments

>Tax breaks for proposed and potential data centers could easily cost billions of dollars

Does the author not understand what a tax break is? Tax payers are not giving billions of dollars to the company building a data center.

Not in isolation, no - but this is effectively light industry we’re talking about, and at least some of the infrastructure necessary to support it is being paid for by tax dollars. If you cut taxes for those entities too far, they end up not paying for the services they’re directly using.

They kind do cost the public millions of dollars. Land that once was taxed, stops generating tax revenue, (depending on the type of tax break) but the data center requires much more infrastructure: roads, lanes, sidewalks, lights, power transport, utilities. Then the public pays for all that infrastructure through fees and taxes. then the data center competes for utilities, driving up those prices. There's little to no upside. I understand the resistance.

>stops generating tax revenue

You have it backwards. That tax was a cost for the property owner. If the tax revenue goes away then there is a cost for no one.

>the data center requires much more infrastructure

Regardless of if the infrastructure upgrade is not fully funded by the company building the center, this cost is independent from the tax break.

> That tax was a cost for the property owner. If the tax revenue goes away then there is a cost for no one.

Wrong. The tax revenue "doesn't go away", it's shifted to the other taxpayers who foot the bill for those who don't pay. That's why tax-breaks are recognized as subsidies by everyone who knows something about the topic.

So if I don't develop my land (because the government won't let me do so affordably, lol) and pay $0ish that's better than if some big moneyed interests that can pay their way through the regulatory spaghetti you've concocted and develop something, anything there? Even if they pay no tax on the land development there's still taxable activity going on there. Someone is paying tax on the toilet paper in the employee bathroom and whatnot. And of course the actual productivity gets taxed too (investment income, capital gains or whatever) or the income of the accountant you hire to prevent that stuff from getting taxed gets taxed. In any case it's still very net positive.

IDK if you've ever driven through Kentucky but it's the kind of state that isn't exactly lacking for places to put odious industry.

Why do you even care about some town in Kentucky's tax receipts anyway? Lord knows they'll probably use it on abstinence only sex ed.

It depends on what the land is developed for of course. 'Something' is not always better than 'nothing. I'm sure you can imagine land being developed in a way that is a net negative to the local community and economy.

Taxes are calculated individually and are independent of one another. They do not get shared among the tax base. Other people paying property tax do not have to pay the property tax for the data center's land.

As a thought experiment let's say I am in a state with a sales tax. If I buy a game console from a different state that doesn't have sales tax it doesn't cost the tax payers of the state I'm in anything yet we enter a reality where I am happier than in an alternate reality where I did not buy it. The taxes paid are the same in both sceneries, but there is more happiness in society in one sceneries.

> Taxes are calculated individually and are independent of one another.

They are not independent. Total tax revenue is the key metric and it is sum of the individual components. If that value is not large enough taxes go up or services go down or both. So if the data center is not paying property taxes but is using services like road building and maintenance, police protection, fire department, water and sewage infrastructure, etc, then those costs ultimately get passed to the people who are paying property taxes.

>taxes go up or services go down or both

Or fraud goes down. Or useless wastes of money is no longer tolerated. Or the government is made more profitable. It is definitely possible to do more with less.

Anyways you are trying to distract from the point as what you are arguing is not what this conversation is about I think. Unless you think all of those services will require raising their prices by billions of dollars despite somehow operating under a budget where that same land was not bringing in billions of dollars of property tax.

The tax payers are not paying billions of dollars as a cost to enable the tax cut to happen.

These kinds of tax breaks are a form of legalized fraud, imho. These tech companies absolutely have profit margins enough to pay taxes in full. Reducing their taxes while all the other business and property owners have to pay the full rate is unjustifiable.

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