Wisconsin Watch: Wisconsin data center tax break to cost state more than $2 billion

Wisconsin is set to forfeit more than $2 billion in sales tax revenue as a result of a 2023-25 state budget exemption designed to attract hyperscale data centers. Trillion-dollar companies like Microsoft and Meta are benefiting from this sales tax break on construction and equipment purchases for facilities in Beaver Dam, Mount Pleasant, and Port Washington, along with a smaller Epic project in Verona. Initially, the nonpartisan Legislative Fiscal Bureau did not estimate the full cost of the exemption. However, a new projection indicates the state will lose $1.5 billion during the construction phases and an additional $369 million annually once the facilities are operational. While some economists, like Ross Milton from the University of Wisconsin-Madison, argue this isn't lost revenue because the data centers likely wouldn't have built in Wisconsin without the incentives, others, including Wisconsin Policy Forum President Jason Stein, suggest the state could recover some revenue through other taxes. The unexpectedly high amount of forgone revenue has intensified calls for data center regulation. State Sen. Jodi Habush Sinykin, D-Whitefish Bay, who requested the fiscal estimate, advocates for linking the tax exemption to environmental protection requirements and pushing for an extraordinary legislative session to discuss various data center bills. This reflects a national trend where state legislation is shifting from offering incentives to implementing more regulatory measures concerning energy, environment, and transparency.