Data Center Tax Break Headed to the Governor

Liz Gullett

Dec 18, 2015

This week the House passed and the Senate concurred in a package of bills that would provide a fifteen year tax exemption for data centers in Michigan from the General Sales Tax Act and the Use Tax Act. The impetus behind the legislation was to incentivize Switch to build a billion dollar data center in Grand Rapids. Several large organizations came out opposed to the legislation, including the Michigan Chamber of Commerce, the Michigan Association of School Boards, and the American Federation of Teachers Michigan. However, despite the opposition, the House and Senate was able to muster enough bipartisan support to pass the bills. Prior to final passage, two Democratic amendments were adopted that place requirements on the number of net jobs a data center would need to create within the state. The non-partisan House Fiscal Agency has estimated the exemption could reduce the General Fund by $11.5 million per year. However, that is subject to change based upon the number of qualified taxpaying entities who claim the exemption. The approved legislation places a sunset of December 31, 2030 on the exemptions. The bill will be sent to Governor Rick Snyder for final consideration.

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