How can enterprise data centers help Pennsylvania?

Over the last seven years, no enterprise data center has located in states that impose sales tax burdens on data center equipment.

Pennsylvania currently allows a credit for sales tax on data center equipment but has a statewide cap of $7 million that is allocated among all purchasers.  This tax treatment is not nearly adequate to attract an enterprise data center with an investment of several hundred million dollars.

Currently, the Pennsylvania legislature is considering legislation to exempt large-scale enterprise data center equipment from sales and use taxes.

27 states exempt data center equipment from sales and use taxes. Pennsylvania is considering legislation to compete for enterprise data centers.

An enterprise data center is typically a $750 million dollar investment, larger than smaller co-location data centers. It drives:

• 1200 construction jobs
  
• $500 million through 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

For Pennsylvania, this could mean by 2024:

• 33,000 more total jobs
• over $6 billion in total output
• over $2 billion in total wages

Learn more about that about the potential impact of enterprise data centers in Pennsylvania in a 2019 report by EConsult Solutions here.

Watch a video of Facebook’s newest data center in Henrico, Virginia— about the size of an aircraft carrier here.

According to a 2019 report by EConsult Solutions, an enterprise data center could create over $110 million more in net tax revenue for Pennsylvania in 2024 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 economic benefits and tax revenue that new enterprise data centers could bring to Pennsylvania in a 2019 report by EConsult Solutions 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
• 80% more water efficiency than older data centers

For its data centers, Iron Mountain buys renewable power generated by the wind turbines at Ringer Hill, Pennsylvania.

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, Facebook 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

To learn more about the benefits of enterprise data centers on American economies, we’ve compiled a list of reports quantifying the variety of economic and tax benefits enterprise data centers provide.

In September 2020, LoudounNow reported how “Amid Pandemic, Data Center Alley Going Strong.”

• “Loudoun’s data centers, already a fast-growing market, have seen a surge of demand as society has scrambled to replace in-person activities with virtual alternatives. Long an important part of the county government’s budget, they have also been a bright spot as other sources of local tax revenues have fallen.”

In October 2020, Washington Business Journal reported how “Jaw-dropping numbers: Loudoun’s data center tax revenue could top real estate taxes in just a few years”

• “We write often about the fiscal impact data centers have had on Loudoun’s budget, allowing the county to consistently reduce its real estate tax rate even as its population continues to soar — and demands for county services rise.”

The US Chamber of Commerce published a report on the economic opportunities generated by data centers nationwide.

EConsult Solutions published a report describing the economic and tax benefits of potential data centers in Pennsylvania.

Read more about the economic and tax benefits in other states:

• The impact on Virginia
• The incentives for Virginia’s legislature
• The potential impact for Michigan
• The potential impact for Maryland
• The potential impact for Pennsylvania
• The impact on Illinois

Read about the overall economic impact of enterprise data centers from the companies themselves:

• Economic impact and community benefit of Facebook
• Economic impact and community benefit of Google

Enterprise data centers made $60 billion in capital investments in the US in 2019 alone, leading all other industries, according to the Progressive Policy Institute.