WASHINGTON — When Republicans passed the One Big Beautiful Bill Act last year, they knew Democrats would hit them for cutting rich people’s taxes, but they never expected a provision titled “Full expensing for certain business property” to blow up in their faces.
Democrats have latched on to the policy as one of several tax breaks in the new law benefiting data centers, and they’re using it for brutal attack ads amid a public opinion nosedive for the projects.
“He took thousands from one of the biggest data center developers in America. Days later, he voted to give them $70 billion in tax breaks,” a narrator gravely intones in a 30-second spot attacking Rep. Derrick Van Orden (R-Wis.). “Now, Wisconsin families are paying his tab twice: Once for his massive tax giveaway to data centers, then again with higher utility bills.”
With an ugly midterm election on the horizon, many Republicans are scrambling to redefine their relationship with an industry that has become political poison, with a handful suggesting the party should even ban data centers from using certain tax breaks.
“They don’t need any tax breaks,” Sen. Josh Hawley (R-Mo.), who has introduced a bill to narrow eligibility for another of the law’s tax provisions, told HuffPost. “That’s just corporate welfare. They don’t need that stuff. If they want to build data centers, then they have to do it on their own dime.”
On Wednesday, Senate Republicans tried to move a bill called the Ratepayer Protection Act, which asks states to “consider” not raising costs on consumers to accommodate data centers but imposes no actual rules on construction or limits on electricity rate increases. All but four Democrats voted to block it from moving forward, with the rest laughing it off.
“People see that there is a deep integration between these big, billion-dollar tech companies and the Trump administration, and they don’t like it,” Sen. Chris Murphy (D-Conn.) told HuffPost. “That’s why the last bill they’re doing is an attempt to change two years of this corruption story.”
The bill was sponsored by Sen. Jon Husted of Ohio (R), who presided over data center construction in his state as lieutenant governor and is getting hammered for it on the campaign trail. He argued the bill was the best Congress could do right now.
“This bill passing is the only way you get a chance to prove to the American people before the midterm elections which side you’re on,” Husted told reporters before the vote.
Tom Williams via Getty Images
Husted could become a symbol of the data center controversy because of how his opponent, former Sen. Sherrod Brown (D-Ohio), has pummeled him with ads tying him to the construction. Republicans even begged AI companies to spend in support of Husted and help him push back against the backlash.
Trump and many other Republicans, meanwhile, remain unapologetically pro-data center. Texas Attorney General Ken Paxton, who is trailing state Rep. James Talarico in that state’s Senate race, said at a candidate forum this week that he welcomed the developments.
“There’s plenty of open space in Texas,” Paxton said.
This attitude was prevalent early in the data center boom, with politicians in both parties cheering on construction as a way to bring tax revenue and jobs. The GOP-controlled House Ways and Means Committee even boasted of spurring data center construction in a press release about a month after the law’s passage.
The first inklings of a backlash appeared last summer with protests in states including Arizona and Wisconsin. By last fall, politicians in both parties were campaigning against the projects in state legislative races in Virginia and New Jersey. By December, Sen. Bernie Sanders (I-Vt.) was proposing a nationwide moratorium on data center development.
Today, internal Democratic polling has found building data centers to be about as popular as building landfills or prisons. Public surveys have found as many as three-quarters of Americans would oppose building a data center in their community, and some developers have even handed out $10,000 checks to residents to win over skeptical communities. In one West Virginia town, a developer has even paid above-market rate to buy angry neighbors out of their houses.
The whiplash took many members in both political parties off guard, but with the GOP in charge nationally, it’s hitting them harder.
“It’s killing our members, especially in the Midwest,” one Republican political operative working on House races acknowledged, asking to remain anonymous. “It took a lot of people by surprise.”
The One Big Beautiful Bill, which Republicans rebranded as the Working Families Tax Cut, doesn’t specifically encourage data centers, but developers have nevertheless benefited in a big way from the law’s policies that encourage business investment. One provision allows businesses to deduct the full cost of certain property immediately instead of deducting it over several years on a “depreciation” schedule. Equipment inside data centers is eligible for immediate depreciation.
“With new data center costs reaching into the tens of billions of dollars, the short-term tax savings are enormous,” an analyst with the tech industry firm Brownstone Research wrote last year. “This change alone frees up billions in cash flow for the hyperscalers. And that cash will almost certainly be reinvested into even more compute infrastructure.”
The liberal Institute on Taxation and Economic Policy estimated that up-front depreciation saved AI companies nearly $27 billion in taxes last year, though the entire sum was not necessarily tied to data center construction. The conservative Tax Foundation said disallowing data center builders from using the tax break, per a proposal by Sen. Mark Warner (D-Va.), could save the government as much as $46 billion over a decade.
“It’s killing our members, especially in the Midwest… It took a lot of people by surprise.”
Democrats had depreciation in mind in their attack ad against Van Orden, as well as in another spot by the League of Conservation Voters targeting Rep. Tom Barrett (R-Mich.). (LCV has zeroed in on the tax breaks as a major weak point for the GOP, spending $2 million on similar ads in five other swing seats in Arizona, Iowa, Wisconsin, Minnesota and Virginia.)
“He took data center money and gave us a tax break, and now we can build one in your backyard,” says the imaginary data center builder who narrates the ad in Michigan. Barrett is facing William Lawrence, a progressive who won a heavily contested primary on an anti-data center stance, in the general election.
Barrett is running his own ads trying to stake out an anti-data center position.
“So while politicians are cozying up with big tech billionaires to force data centers on our communities, I stood up to my own party and voted against giving your tax dollars to data centers,” he says direct-to-camera in one spot, citing a decade-old vote in the state legislature against giving sales tax breaks to data center equipment purchases.
Van Orden, for his part, has argued that his opponent, Democrat Rebecca Cooke, has a more pro-data center record than he does.
“If you’re looking at who has actually spent years working around data-center development in Wisconsin, Rebecca Cooke served on the Wisconsin Technology Council board while the organization promoted major data-center projects involving Microsoft in Mount Pleasant and Meta in Beaver Dam,” a campaign spokeswoman wrote in an e-mail.
Another provision of the bill expanded a break on capital gains taxes for business developments in so-called opportunity zones. The National Community Reinvestment Coalition has estimated 14% of data centers are in opportunity zones, with 17% of planned or under-construction projects in such areas. Several Democrats, including Rep. Chris Pappas, the party’s Senate nominee in New Hampshire, have proposed disqualifying data centers from opportunity zones.
“Tax cuts need to go to families, not data centers,” Rep. Kristen McDonald Rivet (D-Mich.), sponsor of an anti-data center bill, said earlier this month.
As for Husted, the assault on his pro-data center record isn’t stopping. On Thursday morning, the Democratic anti-corruption group Defend The Vote launched a $7 million ad buy slamming him on the issue.
“Husted’s taken hundreds of thousands of dollars from data center developers,” the ad’s narrator says. “Then he got to work, voting to give them billions of taxpayer money.”