📢Arizona joins socialist led Seattle City Council, caves to anti-growth, anti-AI coalition.
PRC, DeepSeek rumored to be chuckling.
This is unfortunate.
A three-year moratorium on Arizona’s data center tax incentive is arbitrary, bad for business, and not supported by the facts.
Arizona has had this incentive on the books since 2013. Lawmakers renewed it in 2021 and extended it through 2033. So what has changed since lawmakers renewed it?
Well, it is certainly not the math.
Critics estimate the incentive costs roughly $40 million in foregone state revenue. Meanwhile, the industry generated an estimated $863 million in state and local taxes and boosted Arizona’s GDP by $25 billion in 2023. From 2017 to 2021, it generated an estimated $2.3 billion in state and local tax revenue.
The incentive has a cost. But ignoring the other side of the ledger is disingenuous.
And it’s not as if the industry has moved backward. Many projects are moving toward lower-water designs, utilities have said data centers should pay their own way on power and infrastructure, and cities have added guardrails on zoning, noise, infrastructure, and project-specific conditions to ensure these projects have local oversight.
So if the math did not change and the industry has more guardrails, what changed?
The politics did.
Data centers have become the convenient boogeyman for serious issues facing our state: housing affordability, water, utility costs, infrastructure, you name it.
And the moratorium itself gives the game away. If this incentive is truly indefensible, make that case and repeal it. If the issue is accountability, cost, water, power, noise, or local impacts, debate reforms.
But a three-year pause is splitting the difference. It lets policymakers say they are “doing something” about data centers without making the full case that Arizona should walk away from the program.
That is not serious policy. It is political expediency.
So when people ask, “Why shouldn’t we just get rid of the incentive?” here is the answer: because Arizona’s word has to mean something.
This is not an argument that tax incentives are always good policy. Government shouldn’t be in the business of picking winners and losers. But Arizona also made a commitment.
We told the industry that if they bring tens of millions of dollars in investment to Arizona, and often much more, we will make it worth their while.
Going back on that commitment affects more than just data centers. It tells every other industry looking at Arizona that our commitments are only good until they become politically inconvenient.
A stable regulatory environment matters. Companies do not make long-term investments when the rules change every time the political winds shift.
Dozens of states offer similar data center incentives. Arizona is not competing with itself. A moratorium does not make the investment disappear. It just gives other states a better shot at landing it. Money goes where it is welcome.
A moratorium risks sending billions in private investment, construction jobs, permanent jobs, utility payments, infrastructure improvements, and future tax revenue to other states.
We are trading long-term competitiveness for short-term politics.
It is bad policy, bad for business, and bad for Arizona.