More than a quarter of US states do not properly disclose revenue lost to data center tax abatements, according to a report by advocacy and research group Good Jobs First.
Alabama, Arkansas, Idaho, Iowa, Indiana, Louisiana, Maryland, Missouri, Mississippi, North Carolina, North Dakota, Oklahoma, South Carolina, and Utah are the 14 states which do not disclose their revenue loss, according to the report.
The report claims that this violates the Generally Accepted Accounting Principles (GAAP), an accounting standard used by all state and most local governments and set by the Governmental Accounting Standards Board (GASB), a private organization responsible for establishing financial reporting standards.
Governments conform to GAAP standards in order to get better credit ratings and thus lower the cost of borrowing.
The report argues that these states should be disclosing revenue lost to tax abatements because their actions match GASB’s definition of a tax abatement.
“For financial reporting purposes, this Statement defines a tax abatement as resulting from an agreement between a government and an individual or entity in which the government promises to forgo tax revenues and the individual or entity promises to subsequently take a specific action that contributes to economic development or otherwise benefits the government or its citizens,” says GASB Statement 77, which relates to the disclosure of tax statements.
Georgia, Virginia, and Texas, which do disclose their data center tax abatements, have all reported more than $1 billion in tax revenue losses per year.
Tax abatements are a common but increasingly unpopular tool used by governments at the state and local level to attract data center developers.
Those opposed to their use argue that states are forgoing more tax revenue than needed, and that data center developers – which can be the hyperscalers themselves, or companies backed by wealthy investors – should pay what is considered to be a fair share.
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