Microsoft Chooses Iowa Due to Data Center Tax Incentives

Recently, Microsoft looked to build its newest data center facility, and the choice came down to two states: Washington and Iowa. However, The Seattle Times noted that the tech giant may be looking to teach the Washington legislature a lesson after governing bodies could not come to an agreement on data center tax incentives.

Toward the end of April, Microsoft confirmed plans for a $1.1 billion Iowa data center, an announcement that came a mere six weeks after Washington officials adjourned meetings without continuing certain tax incentives that are near expiration. For this reason, it seems Microsoft may be looking to send the state a message as it launches construction of its newest data center in West Des Moines.

Offered Data Center Tax Incentives
The Seattle Times reported that due to Iowa’s exemption on sales tax for data center operators, Microsoft would save an estimated $20 million in facility-related purchases. The tax break would have been similar if the company chose a site in Washington, however, construction would have to begin before July 1, 2015. This is the date that Washington’s server tax incentive program ends. For Microsoft, this was a quickly approaching deadline that it did not want to miss.

Perhaps for this reason, the tech giant elected to partner with Iowa officials for its newest data center project, simply because the state expressed an interest, whereas Washington did not seem to support the initiative with the proper incentives.

DeLee Shoemaker, Microsoft state government affairs senior director, noted that while the decision to launch a data center project can hinge on a number of factors, this project came down to the fact that Iowa “went after the business.”

“Our concern is that a failure to offer tax incentives to encourage technology investments in this state is making Washington uncompetitive for future siting decisions by Microsoft and other technology-based employers,” Shoemaker said.

Data Center Tax Incentives Encourage Investments
This is by no means the only time a data center operator made its decision due to the tax incentives being offered. The Washington Post reported last year that thanks to Virginia’s data center tax incentives, RagingWire agreed to invest a total of $150 million in the state, and establish 50 new employment opportunities. This also meant that the company was eligible for the state’s sales tax exemption, applicable to computer hardware and infrastructure component purchases.

While a sales tax break can be an important factor, Lifeline Data Centers also noted that some states offer property tax exemptions, another top data center incentive.

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