Tax Breaks for Michigan Data Centers Under Fire from Bipartisan Coalition

December 16, 2025

A bipartisan group of Michigan legislators is introducing bills to repeal tax exemptions for data center developers that were approved by the state Senate last year, which allow facilities to avoid sales and use taxes on equipment through 2050. While Governor Gretchen Whitmer has championed data center projects as major economic investments creating thousands of jobs, including a massive facility planned for Saline Township, critics argue these developments threaten Michigan's clean energy goals, will increase utility rates, and provide minimal community benefits. Environmental advocates and rural residents are particularly concerned about the facilities' energy consumption, strain on fossil fuel reliance, and disproportionate impacts on vulnerable communities.

Who is affected

Michigan residents, particularly in Saline Township, Lyon Township, Southfield, Howell, and other rural communities where data centers are proposed or being built
Utility customers who may face increased energy rates
Black Southerners and vulnerable communities facing disproportionate health and economic impacts
Working-class individuals whose jobs may be displaced by AI technology
Township governments like Saline Township that lack resources to fight legal battles with developers
Construction workers and potential employees (2,500 union construction jobs and 450+ permanent jobs mentioned)
Data center developers including Oracle, Google, Open AI, and Related Digital
Utility companies DTE Energy and Consumers Energy
Michigan taxpayers bearing the cost of tax breaks

What action is being taken

Representatives Dylan Wegela, Erin Byrnes, and Jim DeSana are introducing bipartisan legislation to repeal tax breaks for data center developers (planned for introduction on December 19)
Residents of Saline Township are continuing to fight against the data center project
Data centers are being proposed in multiple Michigan communities including Lyon Township, Southfield, and Howell
Developers are purchasing land in rural communities across the state
$13 million in tax breaks have been claimed under the current tax exemption program

Why it matters

This issue represents a fundamental tension between economic development and environmental sustainability in Michigan. The data centers constitute massive investments with Governor Whitmer's office describing one project as "the largest one-time investment in state history," but critics argue they undermine the state's ambitious clean energy goals of achieving 100% renewable energy by 2040. The facilities' heavy energy consumption threatens to increase reliance on fossil fuels and raise utility rates for everyday residents, while environmental justice advocates warn that vulnerable communities—particularly Black Southerners—bear disproportionate negative impacts. The debate also reflects broader concerns about democratic governance, as deals are being made "behind closed doors," and about wealth inequality, as billion-dollar companies receive tax breaks while potentially displacing working-class jobs through AI technology.

What's next

Legislators plan to introduce their bill package seeking to repeal the tax incentives on December 19
Nearly two dozen data center projects are currently in development, which is expected to cause tax break claims to "grow exponentially" beyond the current $13 million
Additional data center proposals are being developed for other Michigan communities that have not yet been publicly announced

Read full article from source: Michigan Chronicle