Senator Wyden proposes excise tax on new data centers amid AI boom

Senator Ron Wyden, the leading Democrat on the Senate tax panel, unveiled a draft policy that would strip existing investment incentives for data-center projects and levy a modest excise tax on new centers. The proposal, presented in a five-page white paper, seeks a single-digit gross-receipts rate, with safeguards to limit avoidance and to exempt pre-2024 assets. Wyden cites community worries about land scarcity, power bills, water shortages and noise, and frames the tax as a way to protect taxpayer dollars and aid workers affected by the rapid AI-driven expansion.

He notes that hyperscaler spending on data centers could reach roughly $700 billion, surpassing Argentina’s GDP. The plan also mentions that orbital data centers, such as concepts floated by SpaceX CEO Elon Musk and Amazon CEO Jeff Bezos, would fall under the tax. Wyden maintains the levy would not hinder the United States’ leadership in AI but would fund support for impacted regions and labor forces.