The Texas comptroller’s office revealed that the state is set to lose at least $3.1 billion in sales tax revenue over the next two years because of tax breaks offered to data centers. The news angered many Texas residents, who viewed these massive tax breaks as deeply unfair.
According to reports, the $3.1 billion figure is “likely a vast underestimate given the explosion of new facilities being built,” which is placing additional strain on the state’s public finances. These tax breaks were approved more than a decade ago, and from 2014 to 2022, they cost the state between $5 million and $30 million per year. However, investment in Texas data centers has skyrocketed since 2023.
It was also reported that Texas lawmakers plan to revisit the tax breaks in future sessions, with the possibility of limiting or eliminating them altogether.
Texas Residents Criticize Tax Breaks for Data Centers
The revelation that the state is expected to lose such a huge amount of money to tax breaks sparked outrage among many Texans. “So that’s why they’re flicking and popping up here like an infestation. No long-term thinking, only short-term gains,” one user said.
Some people were especially vocal in opposing tax breaks for data centers: “I need states to stop giving businesses freebies. Businesses get a deal based on the notion of job creation. But consider the resident. They’re here generating revenue. They’re here supporting both the business, the city, state, and because of taxes, because of spending, they are creating jobs.”
Others expressed frustration that this money could be used to help address the water crisis but was instead being given to businesses. One person responded sarcastically, “That water is reserved for the servers. Go find your own water.”
Overall, commenters had little hope that things would improve in Texas, even with reports that lawmakers may revisit these incentives in the future. One seemingly disappointed Texan wrote, “I’m already preparing my kids to go live somewhere else. Texas is going down a road that ends in disaster.”
It is still unclear how the state of Texas will address this potential revenue crisis, but lawmakers may have to confront it sooner rather than later.
