Tax Breaks Moving Quickly to Lure Data Center to Grand Rapids

Dec 2, 2015

Credit MPRN

(MPRN-Lansing) There’s a collection of tax breaks rapidly moving through the Legislature to lure a center that stores massive amounts of data. 

Supporters say the incentives would help build a new industry in the state. The Las Vegas-based company Switch says without the tax breaks – and they must be approved by the end of the year -- it will take its server farm to another state that will offer the incentives.

A lot of lawmakers see this as a chance to play host to a growing industry.

“If Michigan is going to play, and that’s the first decision we have to make – is going to play? – then there is an ante,”

says State Senator Mike Shirkey (R-Clarklake), who chairs the Senate Economic Development Committee. Backers say 22 other states offer incentives to attract data centers that serve as the “cloud” where records, pictures, videos, and documents are stored online.

The Michigan incentives include sales and property tax exemptions. Representative Jeff Farrington (R-Utica) chairs the House Tax Policy Committee. He says the bills set the stage to attract a new, modern industry to the state.

“We have a digital economy. We have a service-based economy, and our tax code is really one that’s set up for products from the 1930s and 40s. So trying to update it to be competitive with the other states.”

The legislation is controversial – in part because Michigan in recent years has scaled back its use of targeted tax breaks. State Representative Jim Townsend (D-Royal Oak) says there’s also no guarantee the tax breaks will result in a significant number of new jobs:

“If this is so good for our economy, it should be creating a lot of jobs. So it should be a no-brainer for some basic job targets to be included so that taxpayers, citizens of this state can be assured they’re getting their money’s worth.”

Opponents also say it’s a return to policies of using tax breaks to favor some types of businesses over others that still have to pay those taxes.