This isn’t politics. It isn’t ideology. It’s arithmetic: did the benefits exceed the costs?
Part I dealt with power, electric bills, water and pollution. Now follow the money.
The complaint is familiar: Why are states and local governments giving tax breaks to Amazon, Google, Meta and Microsoft? Corporate welfare for Big Tech!
Fair enough. But a tax incentive is an investment decision, not a social or political debate. The relevant question is simple: What was the cost and what was the benefit? Were taxpayers worse off or better off as a result of said investment?
CLAIM #1: “States are giving Big Tech billions in corporate welfare!” FACT: In 2025, Virginia data centers received about $1.94 billion in sales-tax exemptions. In return, those companies invested about $48.6 billion in the state. Virginia estimates that investment will generate about $3.07 billion in state and local tax revenue over five years.
Virginia gave up $1.94 billion to attract $48.6 billion in CAPEX and expects $3.07 billion back in tax revenue. That’s not corporate welfare. That’s a return on investment that would make Warren Buffett green with envy.
CLAIM #2: “Data centers don’t pay their fair share of taxes!” FACT: Loudoun County, Virginia—the nation’s largest data-center market—data centers are forecast to generate $1.2 billion in real and personal property taxes in 2026, equal to 39% of the county’s budget, and 2027 is projected at $1.3 billion, or 40%.
Federal Reserve researchers estimate data-center investment alone could add about 0.4 percentage point to U.S. GDP growth in 2026 after adjusting for imported equipment.
Depending on the period and methodology, AI-related investment has accounted for roughly 25% to 50% of U.S. GDP growth, with one widely cited estimate putting the share at 92% in the first half of 2025.
Hundreds of billions in private investment. Billions in local tax revenue. A meaningful share of U.S. economic growth. The economic contribution is hard to dismiss.
CLAIM #3: “Ordinary taxpayers subsidize them!” FACT: Loudoun County data-center revenue significantly increased funding for schools and local services while residential property-tax rates fell from $1.145 per $100 of assessed value in 2016 to $0.805 in 2026.
Data centers generate roughly $609 of taxable value per square foot—about three times other commercial uses. Better yet, Loudoun receives roughly $26 in data-center tax revenue for every $1 it spends providing them county services.
Nationally, the best causal research found data-center growth from 2019–2024 reduced residential electricity rates by roughly 6% versus what they otherwise would have been.
Ordinary households aren’t footing the bill—they’ve been cashing the check.
SO WHAT DID WE LEARN? Tax incentives should never get a free pass. They should have to pencil.
- Virginia gave up $1.94 billion in taxes, attracted $48.6 billion in private investment, and expects $3.07 billion back in tax revenue.
- Loudoun gets roughly 40% of its budget from data centers and about $26 in tax revenue for every $1 of county services they consume.
- Nationally, AI and data-center investment has become one of the major engines of U.S. economic growth.
- The only question that matters is whether the benefits exceeded the cost. If they didn’t, it was corporate welfare. If they did, it was smart economic development that benefited the community.
Part III: “They Don’t Create Any Jobs!” — Let’s see what the numbers actually say.
Mark Lazar, MBA
CERTIFIED FINANCIAL PLANNER™
