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FIRST ON FOX: Anxieties over data centers have cranked up considerably, and one Senate Republican wants to close a tax loophole that he argues tech giants are using as “corporate welfare” to build facilities throughout the country.
Sen. Josh Hawley, R-Mo., plans on introducing legislation that would tie up a tax loophole for data centers first unleashed by Republicans in 2017 that he charged has been exploited by tech companies to build their sprawling data center facilities.
It comes as the GOP wrestles with how to handle the data center and AI issue, which has become a major political wedge on the campaign trail, one President Donald Trump has called a “hoax.”
Sen. Josh Hawley, R-Mo., speaks during a Senate hearing in the Hart Senate Office Building in Washington, D.C., on Feb. 10. (Michael M. Santiago/Getty Images)
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That loophole, Hawley told Fox News Digital in an interview, is for Opportunity Zones, which he said are generally meant for “for low-income areas, low-income housing, low-income businesses or businesses in low-income areas.”
“These data centers have figured out a way that they think that they can access all of this money,” Hawley said. “So, let’s be clear. This is a form of corporate welfare. They don’t need any welfare. These people are rich. They can pay their own way.”
The tax breaks were first approved by Congress as part of Trump’s first-term tax cuts package, the Tax Cuts and Jobs Act of 2017. That initial bite at the apple established them as a means to spur investment into lower income or forgotten areas where tracts of land were dubbed Opportunity Zones.
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They were then made permanent last year through the “big, beautiful bill,” and though not explicitly intended to be used for data centers, have since provided a route for tech companies to defer, reduce or outright eliminate corporate gains taxes on their investments in the zones.
Since both tax packages were passed, 8,746 Opportunity Zones have cropped up in the U.S., according to the Department of Housing and Urban Development, just under half of all zones are in rural areas, where tech goliaths have set their sights on building data centers.
And, according to a report from the National Community Reinvestment Coalition, 14% of all data centers are in Opportunity Zones, while just over 17% of all permitted, approved and under construction data center projects are in the zones.
Hawley’s forthcoming bill would explicitly exclude data centers from being able to access the tax cuts, adding another barrier at the federal level in an attempt to try and slow their rapid development.
And it comes as Congress scrambles to answer the growing fears over unfettered AI development, which data centers play a key role in.
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Concerns have rippled through the halls of the Capitol since its return this week after a call from major players in the AI industry to slow development, which came after engineers at Anthropic revealed on X that there was a roughly 10% chance that AI could wipe out humanity within a decade. The topic of reining in the technology is not new.
Three years ago, Senate Minority Leader Chuck Schumer, D-N.Y., convened several panels with tech CEOs, including one with Tesla CEO Elon Musk and Meta CEO Mark Zuckerberg, to hash out what AI legislation could look like in Congress.
Since then, there has been little to no legislative action taken.
Hawley argued that Congress needs to at least put guardrails on AI and give people the opportunity to sue tech companies if their data and personal information has been used without their consent.
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When asked why no real action had happened since Schumer’s series of AI summits, Hawley contended it was “because all the tech CEOs then promptly gave Schumer and the Democrats gobs and gobs money, and they decided that, you know what, maybe this industry is going fine.”
“And now what you see the same tech CEOs saying is they want an antitrust exemption so they can all talk together and work together,” Hawley said. ‘Any regulations, they want to write them themselves. And they’re out there saying, ‘The sky is falling, the sky is falling. You need to let us get together, write the regulations and figure out what we’re going to do.’ I’m pretty skeptical of that, I have to say.”