LANSING, Mich. — State Sen. Jim Runestad (R) plans to introduce legislation that would repeal the sales and use tax exemptions granted to data center developments in Michigan law, setting up a fresh fight over the state's push to attract the multi-billion-dollar computing industry.
The exemptions that Runestad would strike were first introduced in 2023 and approved by the governor on the last day of 2024. Those same tax breaks helped bring the Stargate data center, run by OpenAI, Oracle, and Related Digital, to Saline Township.
House Bill 4096, one of the two bills Runestad is aiming to repeal along with Senate Bill 237, allows the sale of data center equipment to the owner or operator of a qualifying data center to be exempt from tax. The bill also prohibits the Michigan strategic fund, controlled by the Michigan Economic Development Corporation, from disclosing any information that is not aggregated or that could be used to identify a specific person or data center.
"Why is the state underwriting these multi-billion dollar corporations that have unlimited money to build these data centers?" Runestad said. The senator says the corporations developing data centers across the state "just want the additional money," and doubts they will stop building in Michigan without the breaks.
Runestad is also seeking to repeal the language that limits public disclosure. "Part of that bill that put all these tax credits together also said 'we can't give you any information, how much tax credits are they getting,'" Runestad said. "The corruption is off the charts. Why is it off the charts? The same reason always, money."
Representative Joey Andrews (D-St. Joseph), who sponsored House Bill 4096, said the disclosure restrictions were designed to protect trade secrets and national security. "You can glean quite a bit from what these projects look like based on what they're spending money on, how much they're spending, when they spend it," Andrews said. "We don't want China or another enemy country learning a little bit too much with how we do these things."
Andrews also said the legislature built the bill off the existing colocation tax credit, which carried similar language. He warned that repealing the exemptions would put a chilling effect on data center development, which he called the "21st century industrial revolution."
"It would send a signal, not just to data center developers, but developers broadly that Michigan can't make up its mind. That we pass a law and then two years later we repeal it. That sends a really bad message to economic developers in general, to big corporations that might want to come to Michigan," Andrews said.
Mike Alaimo, Vice President of Legislative and External Affairs for the Michigan Chamber of Commerce, said hyperscale data centers present a "massive opportunity" for the state and cite significant new investment in a state that is, in his words, "in dire need of it." Alaimo said repealing the incentives would signal to corporations that Michigan "is not open for business."
Alaimo argued that more can be done on transparency, but said other states have "done a much worse job" than Michigan, with some seeing massive energy rate spikes because they did not put key protections in place.
Andrews said his original bill was "overly restrictive." His office is working on a new bill that could allow more information disclosure about the tax breaks offered to data centers.