Legislature Passes Massive Tax Break Deal Despite Weak Promises & Flimsy Estimates

December 21, 2015

In a disappointing development last week, the Michigan Legislature passed a set of bills worth hundreds of millions of dollars designed to satisfy the demands of an out-of-state data center company who intends to develop a server farm in West Michigan.

The Michigan Chamber continues to welcome any company to locate in Michigan, but our priority lies with helping existing companies who have made real commitments to our state and residents. Legislators briefly came to their senses and realized that Michigan already has existing data center companies who would have been at a serious competitive disadvantage had the legislation been for only one out-of-state company. The law now applies to data centers in general.

The legislation passed last week provides a massive sales and use tax break for data center equipment and for all materials related to data center construction. At the same time, most legislators and the Administration rejected a directly related amendment that would have shut the door on the Michigan Department of Treasury’s continued efforts at illegally impose sales tax on Michigan companies who use cloud-based services. State Rep. Michael Webber stood up for existing Michigan companies by offering this amendment. Unfortunately it was rebuffed by those pushing this package of bills.