Tax Increment Financing and Data Centers are incompatible. 

• Existing taxpayers lose

• Local governments lose

• School districts lose

• Economic benefits are insignificant beyond temporary construction employment

The use of TIF for hyperscale data centers should be forbidden by state law due to the harms it causes to taxpayers, schools, and communities.

Taxpayers lose with higher taxes because of the data center

As a data center building hits the tax rolls, local government is afforded the opportunity to raise its tax levy by a large amount:

• Mount Pleasant, 2026 budget, allowable increase: 17%

• Port Washington, 2028 projected increase: 34%

• Beaver Dam, 2028 projected increase: 14%

Tax levy increases due to a TID are funded exclusively by existing residents. The data center developer does not contribute to the general fund until TID closure.

Local government loses if they don’t raise the levy

If a local government chooses not to raise the levy, they forgo the opportunity to get more revenue out of the large data center project.

Small communities can no longer grow because they have a massively larger valuation base to grow on top of.

At time of TID closure, the property tax rate will drop substantially. That is great for taxpayers of course, but any open TID at that time will have its revenue forecast decimated. Likewise, it will be very difficult for a local government to create new TIDs as the revenue projections will be too weak to support project funding.

School districts lose

Large data center TIDs lock up millions of dollars in school funding for 2 decades+. School districts unable to wait 20 years for additional funding thus resort to large referendum requests, further harming taxpayers.

Mount Pleasant: $20M/yr

Port Washington: $15M/yr

Beaver Dam: $3.7M/yr

Minimal economic benefits

Data center projects receive massive property tax credits for development whose only direct economic benefit is short-term construction jobs.

Mount Pleasant: Microsoft, $115M

Port Washington: Vantage, $450M

Beaver Dam: Meta, $110M

Sales tax exemption estimates likely take the total tax abatement to $1B over the life of the projects. 

Industry average is 20 permanent jobs per data center building.

Policy prescription

Microsoft recently announced they would no longer seek property tax abatement in their data center deals. Wisconsin’s legislature should make this the new standard for all proposals, banning the use of tax increment financing for large data center projects in order to protect local taxpayers.

For more information, please see https://www.widatacenterfacts.org/topics/the-perfect-storm.