A data center tax credit touted by a bipartisan group of state lawmakers and Illinois Gov. J.B. Pritzker is being called corporate welfare by a group that supports free enterprise.
At a data center in Chicago on Monday, Pritzker was joined by Democratic and Republican state lawmakers to talk about a measure they passed this Spring that provides a tax exemption from sales tax for certain data centers.
The incentives specifically target data centers as part of expanded economic development efforts, the governor’s office said. The measure also provides a 20 percent income tax credit for wages if the data center investment is in an underserved area.
Pritzker said the move provides a “welcoming a surge of economic development, labor income, and good union jobs to Illinois – and not just here in the established market of Chicago, but across our whole state.”
The governor’s office said data center investments will fuel new construction and create good paying jobs across the state.
“This incentive and these data centers, which we advocated for during the budget process, will help create jobs and invest in our communities,” Senate Republican Leader Bill Brady, R-Bloomington said.
“This move will help us be a leader in the fast-growing data center industry,” said state Sen. Elgie Sims, D-Chicago. “Not only are we now in a position to compete with neighboring states, but by growing Illinois’ presence in this industry we will bring revenue and jobs that are desperately needed in our state.”
A special carve out for data centers is bad policy, Competitive Enterprise Institute Senior Fellow Ryan Young.
“A principle of good policy is that the rules should apply to everyone, not just a select few,” Young said. “By that measure, Illinois’ tax break for cloud data centers is bad policy.”
Young said Illinois’ exemptions applies to one sector and is only available to large companies.
“The sales tax exemption requires a $250 million upfront capital investment, which more or less restricts it to the Googles, Amazons and Oracles of the world,” Young said. “None of these companies need the help.”
He said if the point of the tax break is to make Illinois a better place to do business, then why not apply it to everyone.
“This tax break is corporate welfare, plain and simple,” Young said.
“Given Illinois’ perilous fiscal situation, the state’s taxpayers would be better served if Springfield concentrated its efforts on reducing spending and deficits rather than doing favors for profitable businesses,” Young said.