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How could hyperscale data centers help Michigan?

America’s networks and data centers enable all that we do online today. Hyperscale data centers create tech jobs, boost the local economy, and support a better online community everywhere.

In fact, a 2020 Mangum Economics study analyzed the economic benefits of constructing a new, $750 million hyperscale data center in several Michigan counties, both directly and in ripple effects that generate benefits statewide.

If a hyperscale data center were to locate in Genesee County, Michigan could enjoy more than $310 million in pay and benefits for over 4,200 jobs added during construction, and over $250 million in additional annual economic output once constructed.

2020 Mangum Economics Study

But Michigan needs a sales tax exemption to attract hyperscale data centers

For nearly a decade, no enterprise data center has located in states that impose sales tax burdens on data center equipment—Michigan is one of them.

Michigan currently has a limited sales tax refund program for data center equipment, but this program has not been competitive with the 30+ states that simply exempt data center equipment from sales and use taxes. Michigan should enact sales and use tax exemption legislation (HB4905 and HB4906) to compete for hyperscale data centers.

A data center sales and use tax exemption (HB4905 and HB4906) would help Michigan compete for new hyperscale investments and jobs.

Michigan can bolster its competitive business climate by joining 30+ other states that provide qualified data centers long-term certainty through a sales tax exemption on data center equipment, and position the state to attract new hyperscale data center investments.

An enterprise data center is typically a $750 million dollar investment, larger than smaller co-location data centers. This kind of investment can drive:

  • 1,200 construction jobs
  • $500 million to the local economy during construction

Once built, each site generates

  • 100 direct employees
  • support for 300 additional jobs in security and maintenance
  • almost $200 million dollars in local economic activity once operation begins

Learn more about the potential impact of enterprise data centers on jobs and communities nationwide through a 2017 report by the US Chamber of Commerce here.

Watch a video of Meta’s data center in Henrico, Virginia here.

An enterprise data center could create almost 20 million dollars in annual revenue for the state and localities due to:

  • Income taxes paid by employees and contractors
  • Corporate income taxes from data center operators & contractors
  • Sales taxes on non-exempt equipment and supplies
  • Lodging taxes for visits by contractors and workers
  • Sales taxes on business services
  • Local real estate & personal property taxes

Read more about that about the potential tax revenue new enterprise data centers could bring through a 2020 report by Mangum Economics here.

Facebook and Google are committed to using renewable energy in their enterprise data centers

  • Sourcing 24/7 carbon-free energy for all data center operations
  • Producing over seven billion kilowatt-hours of electricity from
    • Wind farms
    • Solar photovoltaic energy production
    • Waste conversion into electricity

Enterprise data centers connect to high-capacity networks by building network infrastructure that can be used by schools, colleges, health institutions, and more.

  • In North Carolina and New Mexico, like in other states, Meta brought high-speed internet to five counties in a new internet fiber route
  • Microsoft’s Airband Initiative brings high-speed internet to rural America, partnering with multiple broadband service companies for the effort