Hawley Moves to Block Data Centers From Opportunity Zone Tax Breaks
Sen. Josh Hawley plans legislation to exclude data centers from Opportunity Zone tax benefits, calling the arrangement corporate welfare and intensifying the GOP fight over AI and data center growth.
Sen. Josh Hawley, R-Mo., is preparing legislation that would bar data centers from claiming a federal tax break he says technology companies have turned into corporate welfare, escalating a Republican fight over the rapid buildout of artificial intelligence infrastructure across the country.
The tax benefit in question is tied to Opportunity Zones, a program created by the Tax Cuts and Jobs Act of 2017 and made permanent last year. The zones were designed to draw investment into low-income and rural communities, but Hawley argues data center developers have found a way to use them to defer, reduce or eliminate taxes on their projects.
«These data centers have figured out a way that they think that they can access all of this money,» Hawley said in an interview. «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.»
His forthcoming bill would explicitly exclude data centers from accessing the tax cuts, adding a federal barrier aimed at slowing their development. The move comes as Congress confronts growing anxiety over unfettered AI expansion and the enormous power and water demands of the facilities that support it.
According to the Department of Housing and Urban Development, 8,746 Opportunity Zones have been established across the United States, and just under half are in rural areas where technology companies have increasingly set their sights on building data centers. A report from the National Community Reinvestment Coalition found that 14 percent of all data centers are located in Opportunity Zones, while just over 17 percent of all permitted, approved and under-construction data center projects are in those zones.
The political sensitivity of the issue has grown on the campaign trail, where data centers and AI have become a wedge topic. President Donald Trump has dismissed concerns about the technology as a «hoax,» even as lawmakers in both parties face pressure to respond to the industry's expanding footprint.
Hawley said Congress needs to at least put guardrails on AI and give people the ability to sue technology companies if their data and personal information has been used without their consent. He pointed to the lack of legislative action since Senate Minority Leader Chuck Schumer, D-N.Y., convened a series of panels with tech CEOs three years ago, including one with Tesla CEO Elon Musk and Meta CEO Mark Zuckerberg, to discuss what AI legislation could look like.
Asked why no real action had followed those 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.»
He also criticized tech executives who he said now want an antitrust exemption so they can coordinate with one another. «Any regulations, they want to write them themselves,» Hawley said. «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.»
The debate over data centers has intensified since Congress returned to Washington this week, following a call from major players in the AI industry to slow development. That appeal came after engineers at Anthropic revealed on X that there was roughly a 10 percent chance AI could wipe out humanity within a decade.
Hawley's proposal adds a new front to the broader Republican reckoning over how to handle AI and the data centers that power it. By targeting the Opportunity Zone benefit, he is testing whether a party that has generally favored tax incentives for investment is willing to narrow one of its own signature economic programs when the beneficiaries are among the world's wealthiest technology companies.
