Democrats Target Tax Breaks for AI Data Centers

House Democrats are moving to eliminate federal tax breaks for data centers, a key component of the burgeoning artificial intelligence boom. The legislative effort, led by Reps. Kristen McDonald Rivet, D-Mich., and Don Davis, D-N.C., seeks to prevent these facilities from accessing certain federal investment incentives, including bonus depreciation and Opportunity Zone benefits.

This initiative places Democrats at odds with former President Donald Trump, whose administration has prioritized accelerating data center development and streamlining permitting processes as part of an effort to establish U.S. dominance in the technology sector.

"Washington is giving handouts to big tech companies while American families are drowning," McDonald Rivet stated at a press conference. "These are backward priorities and they're perfectly encapsulate everything that is wrong with the way Washington works, serving interests of big corporations and special interests at the expense of working people."

The bill is supported by 21 additional House Democrats. The lawmakers argue that while these tax incentives were not specifically designed for AI or data centers, the massive infrastructure investments made by the industry make them eligible for significant tax benefits. Concerns are mounting over the industry's substantial electricity and water demands, as well as its impact on local development.

Rep. Deborah Ross, D-N.C., highlighted issues in her district, alleging that tech companies are acquiring land without disclosing their plans to bypass local input. "They've sought to bypass local citizens' right to provide input on putting a data center in their towns and cities," Ross said. She added that the rapid expansion strains electricity and water resources while developers benefit from incentives. "It's Americans struggling to get by, not big tech who need tax breaks," she asserted.

Rep. Chris Pappas, D-N.H., echoed these concerns, stating that data center development contributes to rising costs for his constituents due to increased demand on power and water supplies. He emphasized the need for communities to have greater control over where these facilities are located, asserting, "Our cities and towns shouldn't have these data centers shoved down their throats without any recourse. They deserve the right to decide what's appropriate for their community."