Politics
Wyden targets AI data-center tax breaks while proposing stronger jobless aid
Sen. Ron Wyden’s plan would impose a new tax on services at large data centers and limit several business tax breaks, with the rate still undecided. He would pair the measures with expanded unemployment benefits as Congress weighs AI’s effects on workers and public revenue.
Sen. Ron Wyden of Oregon proposed a new tax on large data centers Friday, along with limits on tax breaks commonly used by businesses investing in the facilities that power cloud computing and artificial intelligence.
Wyden, the top Democrat on the Senate Finance Committee, has not set a rate for the proposed excise tax. He said he will decide after congressional budget analysts estimate how much revenue it could raise.
A draft of the plan would apply to data centers with capacity of at least 25 megawatts and cover services including data storage, cloud computing, AI training and inference, and high-volume data processing. Internet infrastructure and traditional corporate IT departments would be exempt, according to a summary of the proposal.
The plan would also restrict data centers’ use of tax benefits tied to depreciation, research and development, investments in Opportunity Zones and real estate investment trusts. Its proposed limits on research credits are particularly notable: some lawmakers have questioned whether current law already allows companies to claim those credits for data centers, and worry that explicitly barring them in new legislation could be read as accepting that past claims were legal. Wyden’s draft says the provision should not be taken as an indication that earlier claims were lawful.
Wyden said the proposal would be paired with expanded unemployment benefits to help workers facing possible job losses from AI. “Americans feel the looming fear of AI job losses, and Congress has a responsibility to help the country prepare,” he said in a statement, describing the benefits as an initial step toward giving families more wage security.
The proposal comes amid growing public opposition to data-center construction and concerns that tax incentives claimed by companies building AI infrastructure are reducing corporate tax receipts. Technology companies and industry groups are lobbying on the issue. Microsoft disclosed lobbying on Wyden’s proposal, while AI company CoreWeave, the Real Estate Roundtable and the National Association of Manufacturers have also reported engaging lawmakers on data-center taxes.
The plan is an early marker in a broader congressional debate over how to regulate and tax the fast-growing AI industry. Its prospects could depend in part on next month’s Senate elections: if Democrats take control, Wyden would be positioned to lead the Finance Committee and advance the proposal.