A data center project in Orangeburg, N.Y., received $77 million in tax breaks in exchange for creating exactly one job, according to reporting by New York Focus. That sounds ridiculous. But maybe the real problem with data center incentives isn’t that they fail the jobs-per-dollar test; it’s that policymakers keep using one.
Data centers simply aren’t job creation engines. They comprise warehouses of servers requiring enormous upfront investment, lots of electricity, and few full-time employees required to operate.
Local governments such as Orangeburg’s are really supporting infrastructure, not labor. Data centers underpin financial systems, cloud computing, and artificial intelligence. They generate construction activity, draw investment, and can at least conceivably contribute to the local tax base over time.
Those may all be worthwhile goals, but the question is whether they create enough total social value to justify the cost.
That requires specifying what kind of value matters, over what timeframe, and for whom. Such a reframing highlights what decisions are made—infrastructure subsidies may be chosen over funding for schools, and long-term strategic capacity may be financed ahead of immediate fiscal needs.
“Jobs created” sidesteps those issues and offers a simple, defensible metric in place of a more complicated judgment call. The result is a policy conversation where both sides talk past each other. Critics point to the vanishingly small number of full-time positions created and deem the subsidies wasteful. Supporters gesture toward broad economic benefits but seldom clearly define them.
We’re not creating jobs by offering tax incentives to data centers. We’re buying physical, digital, and economic assets and betting they’ll pay off eventually. The public deserves more than a misleading headline metric. It deserves an honest accounting of what it’s paying for—and a say in whether the investment is a good deal.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts discussed Canada’s transfer pricing updates, pro bono tax work in western Alaska, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
More IRS Budget Slashing Is Short-Sighted and Doomed to Fail
Lawmakers should reject President Donald Trump’s proposed IRS cuts and instead invest in the tools, technology, and personnel needed to provide an IRS that serves all taxpayers, Taxpayers for Common Sense’s Steve Ellis says.
Canada’s Transfer Pricing Overhaul Demands Proactive Preparation
Canada’s shift from a form-over-substance approach on transfer pricing to one more closely aligned with OECD standards means that multinationals doing business in the country will need to navigate the rules with care, say KPMG’s Sonia Gobeil, Brad Rolph, and Demet Tepe.
Independent Firms Reinforce Their Edge in a PE-Fueled Market
Accounting firms that want to stay independent while taking on private equity investments risk their client base. Here are five ways independent firms can shore up their focus, operations, and incentives to compete with more heavily funded peers, says Lotis Blue Consulting’s Mark Masson.
Preparing Tax Returns in Remote Alaska Showed Pro Bono’s Value
A winter trip to help villagers in western Alaska file their annual tax returns underscored the importance of pro bono work among tax practitioners, Kostelanetz’s Melissa Wiley says.
New Crypto Tax Form Makes Advisers Into Students and Teachers
Taking a proactive approach to understanding Form 1099-DA and managing crypto tax complexity can make all the difference in future tax seasons, says CoinTracker’s Shehan Chandrasekera.
Five Questions With Forvis Mazars Partner Trey Ackerman
Bloomberg Tax Insights & Commentary is featuring a recurring questionnaire of prominent tax professionals who are willing to share their thoughts about their work and the practice of tax these days. Today we feature Trey Ackerman, who is partner and national tax service leader at Forvis Mazars.
Technically Speaking
States that try to tax prediction markets like gambling platforms risk overestimating potential revenue gains and treading on shaky legal ground, Andrew Leahey says in his latest Technically Speaking column.
“A federal regulatory system with a tax keyed to platform fees would be a more defensible and durable choice,” though even that should come with an explanation of how prediction markets are distinct enough from ordinary brokerages to warrant bespoke treatment, Andrew writes. Read More
News Roundup
House GOP Appropriators Advance Billions in Cuts to IRS, SEC
GOP lawmakers overcame Democrats’ opposition to advance a funding bill to the House floor that proposes cuts to the fiscal 2027 budgets of the IRS, Securities and Exchange Commission, and District of Columbia, while providing a slight increase to the General Services Administration buildings fund.
KPMG to Cut 10% of US Audit Partners to Reshape Practice
KPMG will slash the number of partners running its US assurance business in a bid to boost the unit’s productivity and better align its staffing with market demands.
IRS to Revise Tax-Exempt Form Amid Nonprofit Crackdown
The IRS is updating the tax-exempt reporting form to better detect fraud and abuse amid a broader crackdown in the Trump administration on nonprofits.
EU Will Limit Tax Data Disclosure to Advance VAT Anti-Fraud Bill
EU countries are poised to approve a bill giving the bloc’s anti-fraud agencies access to tax data after amendments were added to ensure privacy rules.
Tax Management International Journal
IRS Revives Commensurate-With-Income Standard in Transfer Pricing
An examination of the IRS’s renewed reliance on the commensurate-with-income standard and the resulting implications for transfer pricing disputes, treaty consistency, and taxpayer risk assessment.
Tax Management Memorandum
Beware of the Measurement Gaps in New Small Business Stock Rules
Practitioners who treat the 2025 federal tax law simply as a gift-wrapped expansion of qualified small business stocks are walking into real compliance risk. Practitioners who move quickly to address the statute’s measurement gaps now will have an advantage going forward.
NIL Earnings Create Serious Tax Risks for College Athletes Today
Thad Madden of Thad Madden Tax Consulting, an IRS veteran, explains why college athletes earning name, image, and likeness income need careful tax planning to avoid serious financial trouble.
Career Moves
Holland & Knight Expands Tax-Exempt Group With Seattle Partner
Alexandra Mitchell joined Holland & Knight as a partner in its tax-exempt organizations and philanthropy practice group in Seattle, the firm announced Tuesday.
Barnes & Thornburg Expand Tax Practice With Three New Partners
Sean Gannon, Jeffrey Luechtefeld, and John Nail joined Barnes & Thornburg as partners in its tax practice, the firm announced Thursday.
Hill Ward Henderson Adds Gabby Lozano to Corporate Tax Group
Gabby Lozano joined Hill Ward Henderson as a partner in its corporate and tax group, the firm announced Thursday.
To contact the editors responsible for this story:
Learn more about Bloomberg Tax or Log In to keep reading:
See Breaking News in Context
From research to software to news, find what you need to stay ahead.
Already a subscriber?
Log in to keep reading or access research tools and resources.