Report: Iowa keeps data center tax breaks in the dark
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Iowa offers limited public information about which companies receive its data center subsidies, even as the state continues to attract major tech operators like Meta, Microsoft, Google and Apple, per a new report.
Why it matters: Local governments lose out on revenue that could otherwise support schools, infrastructure and city services, and the public has little visibility into how much aid these profitable companies receive, says Kasia Tarczynska, research analyst at Good Jobs First, which published the report.
State of play: Iowa is among 36 states that offer sales and use tax breaks for data centers.
- These exemptions allow companies to avoid paying sales tax on equipment and materials used to build or operate a facility, including cables, computers and electricity.
- Large data centers can often spend billions on equipment, Tarczynska says.
- Only 11 states, including Minnesota, Wisconsin, Indiana and Ohio, publicly disclose which companies get those tax breaks.
- It's estimated that Iowa provides at least $150 million annually for these exemptions.
Zoom in: A new state law that went into effect in June marks progress toward tracking the industry's impact, however, Tarczynska says.
- The law requires large data centers to annually report their electricity use and backup generator fuel purchases.
- It also ends the indefinite sales tax exemption for electricity and backup power for large data centers. The exemption now lasts 10 years in urban areas and 15 years in rural ones.
- However, the annual individual reports required under the new law are not publicly available.
Of note: Sales tax exemptions are shared for companies that benefit from some state programs, like Iowa Economic Development Authority's High Quality Jobs incentive.
What they're saying: Tarczynska says more transparency is needed to help Iowans understand how much public money goes toward supporting these projects and what communities receive in return.
- "It's a good first step to provide more accountability," Tarczynska says.