Data In The Dark How Big Tech Secretly Secured $800 Million In Tax Breaks For Data Centers

When Olympus City Councilman Emmanuel Remy argued with the lawyer on his computer screen, he argued that the company he represented deserved a larger tax deduction. At a virtual council meeting in March, the law firm said it wanted to build a data center on a 500-acre site south of the Ohio capital that would employ 20 full-time workers, if possible. The company wants $54 million in tax breaks as a reward. “It’s like a new product,” attorney Scott Jeans told select officials. In particular, Jeans emphasized the benefit to the community in the construction work at the time the facility was built.

Zion’s representative is not Amazon, Microsoft or Facebook, but Magellan Enterprises LLC, a Delaware-registered shell company. Jeans said it was a record for Magellan’s undisputed parent, one of the world’s largest technology companies, to “collaborate” with cities — and data centers requiring tax breaks in exchange for jobs. . “You are proud to have this company and its parents in your community,” he said.

Paying Big Price for Data Center Jobs
Forbes conducted interviews and reviewed documents and news reports, and received full tax breaks, employment and planning information for 15 projects launched since 2015 at the time of receiving the tax breaks. Projects worth about $10 billion created about 837 permanent jobs and were filled with at least $811 million in tax cuts, with about $1 million registered for each permanent job. .

When council members voted in favor of Science’s plan at the meeting, Remy stated that none of them knew the identity of the parent company. Locals, neighbors and other stakeholders were not involved. Only the mayor’s office and city employees negotiated and signed anonymous agreements to learn the true identity of the parent company. City officials declined to release the company’s name, but five months later the incentive was issued, with Forbes identifying the company as Google, according to two sources. “We hope you can share the news about the infrastructure announcement related to the state of Ohio this week,” a Google spokesperson told Forbes. (After publication of this article, Google announced a $1 billion investment in data centers in Ohio, including the Columbus site.)

Columbus is one of dozens of cities and counties across the United States that offer massive tax breaks to large technology companies that want to build data centers when demand grows. Cloud-based computing will compete with demand for other basic products. States including Virginia enacted legislation a decade ago to attract data center developers through the next property tax, which has led to billions of dollars in investments by well-known companies. Technology and construction of more than 70 data centers in Lowdown County, Virginia alone. Since then, more than 20 other states, including Pennsylvania and Connecticut, passed similar laws last year — specifically to attract data centers.

In an effort to outdo each other, these cities and towns have become accustomed to obeying the demands of the world’s biggest technology companies, unless they are encouraged. In a 2018 deal with a small coalition based out of Atlanta, Facebook negotiated a $71 million tax cut package in exchange for a plan to create 100 permanent jobs, according to documents provided by Forbes. It was only after getting encouragement that Facebook publicly announced it.

“We have Facebook and Microsoft and Apple and Google and Amazon: these are the most profitable companies,” said Kasia Dorsinska, analyst at Good Jobs First. “They don’t want attention because it’s so easy to ask why local people give millions and millions of dollars to rich companies.”

With more ground space and more space for multiple soccer fields than commercial air hangars, the data centers contain hundreds of serial computers that process information from photographs to government databases on Instagram and Google to create other companies. and become a critical infrastructure for companies like Amazon. Required space for computer networks and network storage. They have exhausted vast amounts of energy and water resources in the communities they have created. Unlike production facilities, they typically employ no more than a few dozen people full-time to maintain the servers.

Forbes has identified US-based data center projects owned by large technology companies whose identities are hidden by code names or anonymous LLCs until tax breaks are given by the local government. While the figures for some projects are accurate – cities and their elected officials never come up with a stimulus package they approve – Forbes has conducted dozens of interviews and completed the project to get project value and data on 15 projects launched. Has reviewed tax incentives, documentation and news reports. Since 2015. His net worth is $9.9 billion, which was covered by $811 million in tax breaks.

The prices agreed by local governments for anonymous shell companies are high. When incentive periods vary, Forbes analyzes that, on average, cities and districts each generate $1 million in potential tax revenue for a permanent data center job. A 2020 study by researchers at Columbia University and Princeton found that, broadly speaking, when tax incentives were offered across all industries, locals lost an average of $12,000 per job per year; For example, they are usually offered by car manufacturers.