Data center costs should guarantee public benefits

By Rep. John Gannon
Reader Contributor

Idaho’s sales and property tax giveaways to Big Data centers — combined with their possible impact on utility costs — may become the largest subsidy since the 19th-century railroads. Today, data centers investing at least $250 million receive never-ending sales tax exemptions on construction materials and server equipment — even though they are projected to create fewer than 100 permanent jobs. That may mean a whopping $60 million tax gift for each eligible $1 billion spent. 

Meanwhile, Idahoans pay a 6% tax on food, unlike 40 other states that do not tax groceries at all and several others that tax groceries at a lower rate than other items. 

Data center property taxes tell a similar story. Idaho State Tax Commission representatives informed my committee that once a qualifying project exceeds $1 billion in investment, its taxable value is capped at $400 million. A proposed $4 billion data center in Kuna, Idaho, for example, could pay property taxes on only about 10% of its actual value, the representative said. 

At a 0.006 levy rate, that amounts to approximately $2.4 million annually, down from the roughly $24 million annually that would provide real property tax relief for all properties.  

This generous property tax break means that properties that do pay, such as most commercial and residential, pay more. How? Property taxes are equalized. All the property value is added up, and then a levy rate is applied. 

So, if there is more property value in a jurisdiction, the levy rate can go down, and your property taxes are reduced — a lot if a data center pays. If a property is exempt, the remaining properties pay more because the levy rate has to be higher.  

Big Data advocates for the huge sales tax break toId legislators that property tax reductions would be a benefit to local taxpayers. A Meta lobbyist told the House Revenue and Taxation Committee, according to minutes dated Feb. 26, 2020, that there will be a “huge increase in the property tax base, which will reduce the levy rate.” A national lobbyist for Big Data companies told the Senate Local Government Committee on March 25, 2025 that there would be a “massive” property tax reduction.  

That won’t happen, according to Idaho Tax Commission representatives, because of the $400 million cap on an investment of $1 billion or more. Instead, the biggest companies in the U.S., and in the world, will pay very little. It seems a fair ask that their presence benefit our small state, especially given the electricity, water and noise issues they bring. 

This session, bipartisan House Bill 897 passed the House unanimously. That’s right. Unanimous. It modernized Idaho’s approach by requiring payment of property taxes, establishing energy and water standards, and requiring regular public reporting. Unfortunately, the Senate diverted this reform attempt.  

Data centers can benefit Idaho. They bring construction employment, expanded technology infrastructure and opportunities for long-term economic growth. But initial investment alone is not success. Success means Idahoans are better off because these projects came here. That means fair taxation that gives property tax relief, affordable utility rates, safeguards our water and ensures our communities share in the benefits — not just the costs.

Idaho’s current policy asks taxpayers to assume enormous costs without guaranteeing comparable public benefits.

John Gannon is a seven-term representative of District 17, in Boise, and serves on the Idaho House Ethics and House Policy; Judiciary, Rules and Administration; Revenue and Taxation; and Transportation and Defense committees.