Senator Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, released a white paper proposal on August 10th, 2026, calling to end tax incentives for data centers and to impose an ongoing gross receipts tax on data centers operating in the United States. Wyden cited concerns including land use, local power prices, and water use as reasons for the proposed tax, which would apply annually on gross receipts rather than profits. He also suggested taxing data centers built in Earth's orbit.

Critics argue that the tax could raise costs on services used by nearly every American. James Erwin, director of innovation technology at Americans for Tax Reform, said, "A tax on data centers is a tax on your email, family photos, small business operations, cloud storage, and your Instagram, X, TikTok and Facebook posts." He added that "Senator Wyden is betraying his legacy as a champion of a free and open internet accessible to all."

The White House, responding to the proposal, highlighted efforts to support data centers without increasing costs. Assistant press secretary Liz Huston told Fox News Digital, "President Trump is cementing American AI dominance over China while ensuring data centers pay for their own power, water and other utilities." A White House official also noted the administration's "Ratepayer Protection Pledge," which has united over 200 utilities, data center developers, cooperatives, and state leaders to facilitate the creation of more energy sources aimed at keeping prices low.

Wyden's office did not respond to requests for comment. His white paper acknowledges the difficulty in applying a tax to data centers given their widespread use and commonality. The proposal suggests carveouts to focus the tax specifically on data centers as commonly understood, avoiding taxing ancillary operations.

The debate comes amid broader discussions on technology infrastructure and taxation, with critics warning that the proposed tax could ultimately be passed on to consumers through higher costs for digital services.

Sources