Legislature could rein in data centers’ sales-tax break by taxing their equipment instead

Governor DeWine’s order temporarily suspending the approval of new sales-tax exemptions for data centers is a positive step, but it does not go nearly far enough. It does not reduce the existing exemptions that allowed some of the wealthiest corporations in the world to receive about $2 billion in exemptions last year, including both state and local sales tax. They will continue to receive them. It also does not include the estimated $42.3 million exemption going to two Cologix centers, approved just before DeWine’s “pause” was scheduled to go into effect. 

The governor and legislative leadership need to take steps to roll back this unneeded giveaway. They should tell companies receiving the 100% sales tax break – including Amazon, Google and Meta – that they should cut that in half or that the General Assembly will enact a tax on data center equipment to make up the difference.  

Most states, including four of our five neighbors and Virginia, the home of the largest concentration of data centers, have such a tax on tangible personal property. Loudoun County, VA, expects to raise nearly $800 million from that tax on data centers this fiscal year. Ohio did, too, until 2009, and still has one on such property owned by public utilities. Some of a tangible personal property tax could go to schools and local governments and the rest to the state if reinstituted.  

While the full sales-tax exemption should be eliminated, cutting it in half as a starting point would fit with recent Ohio practice to provide 50% exemptions. “This common-sense first step would restore a measure of sanity to our tax code,” said Policy Matters Ohio Research Director Zach Schiller.