Republicans Move To Repeal Data Center Tax Break They Once Championed

Attendees at a Feb. 12 protest called for a pause on data center construction in Wisconsin. (Henry Redman | Wisconsin Examiner)

A group of four legislative Republicans, including two who aren’t running for reelection, announced this week proposed legislation that would repeal the sales tax exemption for data centers that was included in the 2023-25 budget.

The biennial budget signed into law in July 2023 exempts data center developers from paying sales and use taxes for the “sale of property and equipment to construct, renovate or operate data centers.” An analysis conducted by the Legislative Fiscal Bureau in March found that the provision has saved developers in the state $1.5 billion.

The co-sponsorship memo for the proposed bill states that it was authored by Sen. Andre Jacque (R-New Franken) and Reps. Lindee Brill (R-Sheboygan Falls), Dean Kaufert (R-Neenah) and Shae Sortwell (R-Two Rivers). Kaufert and Jacque are both retiring from the Legislature.

The memo points to the significant public opposition to data centers from the public as the inspiration for the bill.

“The tax code should not be used to effectuate crony capitalism,” the memo states.

But Democratic leaders say the proposed legislation is a “stunt” because at this point in the calendar, no legislation is going anywhere. For a bill to even get assigned a number and given a public hearing, a special session of the Legislature would need to be called, according to the Legislative Reference Bureau.

The Republicans who have signed onto the bill say they’ve done so to start a debate about data centers that can be picked up when the new Legislature takes office in January. Brill told WisPolitics.com that it’s “important to start the conversation on this topic.”

For more than a year, data centers have been one of the most prominent political conversations in the state and across the country. President Donald Trump has frequently spoken about his support for artificial intelligence — which he’s decreed should be renamed “super intelligence” — and argued that communities that reject data centers will “end up being backwards and poor.”

In Wisconsin, lawmakers from both parties introduced bills during the last session to regulate the development of hyperscale data centers.

A proposal from Sen. Jodi Habush Sinykin (D-Whitefish Bay) and Rep. Angela Stroud (D-Ashland) and supported by most of the Democratic caucus would have required data centers to report to the state on their energy usage, incentivized the development of renewable energy to power the data centers and require the use of union labor. The bill received a public hearing but did not move forward

A separate proposal from Republicans that passed the Assembly but not the Senate was authored by Rep. Shannon Zimmerman (R-River Falls) and Sen. Romaine Quinn (R-Birchwood). Zimmerman has been criticized in his reelection effort for his work as an executive for AI companies.

The Republican bill would have made data centers pay for their own power development and required any renewable energy facilities built to power the data centers to be located on site — a provision that opponents said would have discouraged any solar or wind projects from actually happening.

Data centers have also played a significant role in the race for governor. Republican Tom Tiffany has tried to paint Democrat David Crowley as being pro-data center.

Crowley’s data center policies largely match the provisions in the previously introduced Democratic bill. Tiffany has said he supports additional regulations on data center developments but has also tied his opposition to the projects with his broader distaste for renewable energy, which he says takes up too much farmland in the state.

Prior to data centers becoming so broadly despised by the voting public, however, Republicans introduced a number of bills that would have encouraged their construction in Wisconsin.

The sales tax exemption that was ultimately included in the budget was first introduced as a piece of standalone legislation in June 2023 by more than a dozen Republicans.

“As we move ever more into a world driven by technology, these facilities will be necessary to provide the storage and processing power required to service societal demands,” Zimmerman said in his testimony at the bill’s June 8, 2023, hearing. “Construction of these facilities require hundreds if not thousands of tradespeople. Once complete, they rely on a highly skilled and highly paid workforce.”

“Beyond the nuts and bolts of the policy and projects to follow, I have a personally [sic] affinity for the industry as I’ve been a tech entrepreneur for the last 30 years,” he continued. “Putting Wisconsin up for consideration when the site selectors are reviewing potential locations would be a step in the right direction.”

In April of 2025, a group of Republican lawmakers introduced another pro-data center bill that would have loosened restrictions on their inclusion in local tax increment districts. These districts are a financing tool used by local governments that divert property taxes paid within that area away from the municipal general fund and direct the money toward infrastructure improvements within the district. Critics of TIDs argue they divert public money to pay for private development costs.

Under current law, the value of property within a community’s TIDs cannot be more than 12% of all the taxable property in the city. The proposed bill would have exempted data centers from the 12% rule. The measure never made it to the floor of either chamber.

“[The sales tax exemption] is already bearing fruit,” Rep. Mark Born (R-Beaver Dam) said at the bill’s April 30, 2025 hearing. “Two enormous data centers are under construction already in Wisconsin (including one in the district that I represent); more are being planned. All of these projects far exceed the minimum capital investment required to qualify for the tax exemption, and it seems that the demand for these facilities in our nation and in our region will only increase with time.”

Months after session, weeks before election, Republicans propose repeal of data center tax break was originally published by Wisconsin Examiner.