A LONG-AWAITED sales tax exemption for data centers based in Massachusetts just went live on Thursday, according to the state office of economic development.
Qualified data centers wouldn’t need to pay the 6.25 percent sales tax for 20 years on equipment, computer software, electricity use, or construction costs under the final regulations.
State officials had been working on crafting the tax exemption since the Legislature required it in the 2024 economic development measure that Gov. Maura Healey signed. But 18 months after that law was signed, the finalization of the tax break comes at a fraught time for the artificial intelligence industry as backlash against these facilities – and the sheer volume of resources they require – mounts across the country.
In Massachusetts, Lowell residents sued state regulators just last week over past approvals for a large data center there. Lowell also enacted the state’s first data center moratorium in March.
In order to be eligible for the tax exemption, data centers must be at least 100,000 square feet, create at least 100 jobs, and invest at least $50 million.
Eric Paley, secretary of economic development, said in a brief interview that he’s aware of the concerns in Lowell and that “every community is going to look at this differently.”
“When it comes to data centers here in the state, we believe as long as data centers are thinking about internalizing the overall externalities, particularly around electricity, but water, too, we’re very open to working with data centers,” Paley said. “Those incentives are pretty strong incentives for those developers, and the AI infrastructure is important to our state’s long term economic success. We’re prepared to invest in that area.”
Business group bucks the tax cut ballot
Maybe Massachusetts should take a harder look at its housing and tax policy, but just because a proposal can go to ballot doesn’t mean it’s the best move.
That’s at least the stance of the business-backed Massachusetts Taxpayers Foundation, which is taking a swing at the progressive push for rent control as well as the package of tax cut ballot measures that influential business and real estate groups want voters to green light in November.
“MTF has consistently opposed initiative petitions, including the income surtax and the elimination of the statewide graduation requirement, because the solutions offered to real policy problems are often oversimplified and introduce unintended consequences that harm the state’s economic and fiscal future,” the group wrote in a new position paper.
The three targets of their ire this year, they warn, may have solid intentions to ease housing costs and make residents feel more fiscally secure, but “would be counterproductive.”
MTF’s position on rent control neatly aligns with longstanding business community objections, arguing it would make new rental properties unattractive for investors and make new rental unit developments financially infeasible. But its opposition to measures that would limit the state’s annual cap on allowable tax collections and reduce the state’s base income tax rate from 5 percent to 4 percent puts it at odds with the business groups proposing those fiscal changes.
The measure that would change the state law on how much money it can collect would create a $5.4 billion revenue timebomb and make it harder for Massachusetts to weather economic downturns.
Child care costs rock middle-class goals for households on the edge
A recent MassINC Polling Group survey for CommonWealth Beacon and WBUR painted a grim picture of residents’ sense of their housing, health care, and saving prospects. But it also illustrated an unevenly distributed financial pressure point – child care.
Only 8 percent of respondents said that being able to afford child care is one of the factors that best describes a middle-class life in Massachusetts. Child care was the household budget item least likely to be described as “affordable” for those who pay for it. (Topline | Crosstabs)
In Massachusetts, 70 percent of infants live in child care deserts and efforts to bring pre-K options to the state’s regional economic centers has been slow going.
“I think sometimes when we think about child care, it’s as temporary situation,” said Amy O’Leary, executive director of the nonprofit Strategies for Children. “You have a baby, then when they turn five, our K-to-12 system is [thought of as] a public good. So that birth-to-five time period, for most families, we hear stories all the time like, ‘We’re just going to figure it out..’”
Residents in the middle class were most likely to say they did not pay for child care (52 percent) and the upper middle and wealthy classes were the only groups where more respondents said child care was affordable than unaffordable. The working class or poor residents offered a shriek of frustration. They were the least likely to say they did not pay for child care, and 45 percent of them said it was unaffordable to their household.
A glance at ballot measure chances
It could be a bonanza year at the ballot box, with up to 11 ballot measures potentially heading residents’ way. And based on a new Emerson College Polling survey of 800 Massachusetts voters, those voters tend to like what they’re seeing on at least three ballot measures.
Legislative leaders have signaled, with irritation, that they expect an initiative to lower the income tax rate to pass if it reaches the ballot. And about 62 percent of voters said they would vote yes on the measure, with only about 19 percent saying they would not.
A proposal for implementing a strict rent control cap also found higher favorables, with 60 percent yes, 26 percent no.
A measure that would dramatically reshape Massachusetts elections – by eliminating the partisan system in favor of a non-partisan primary where the top two vote-getters advance to a general election regardless of party – still drew support from more than half of respondents, but 30 percent said they would not vote for it and more than 20 percent said they were unsure.
Support for ballot initiatives tends to erode over the campaign cycle, as the oppositions fund ad blitzes to undercut the measures. All three of the polled questions are also before the state Supreme Judicial Court, facing challenges attempting to knock them off the ballot.
