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House Bill 279 — Data Center Tax Exemption

House Bill 279 — Data Center Tax Exemption

Phil Haunschild
March 22, 2019

Bill Description: House Bill 279 would give a tax exemption to data centers on their purchases of certain equipment.

Rating: -2

Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?  

This bill would grant a sales tax exemption that would save certain data centers in the state of Idaho an estimated $600,000. This exemption would provide an incentive for other data center companies to relocate here because of a more competitive business environment.


Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?

The fiscal note for HB 279 estimates that 10 businesses would take advantage of this exemption. The state would provide an exemption to a select group of businesses while Idahoans deserving a tax break would not get one. This rebate comes at the expense of other businesses in the state. When some businesses receive exemptions, other taxpayers, including individuals, must pay more to make up the difference.


Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market?

This bill would put the state in the position to interfere with the free market by giving arbitrary benefits to specific types of businesses based on factors deemed important to the government. These factors include the size of the capital investment made, the number of jobs created and the compensation for each of those jobs. HB 279 would specify that only businesses that have already spent at least $1 million in server equipment or businesses that will make at least $250 million in capital investments and create at least 20 new jobs could receive the sales tax exemption.


Does it increase barriers to entry into the market?

In establishing minimum investment and wage thresholds to receive the tax benefits, the legislation  could cause some businesses of the same type to fail to receive the tax break, thus leaving that smaller company at a disadvantage, making it difficult for such a business to break into the market.


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