Hawley Moves to End Data Center Tax Break Tied to Opportunity Zones
Sen. Josh Hawley plans legislation to bar data centers from using Opportunity Zone tax breaks, calling the benefit «corporate welfare» as Congress weighs AI oversight.
Sen. Josh Hawley, R-Mo., is preparing legislation that would prevent data centers from claiming tax breaks under the Opportunity Zones program, arguing that technology companies have turned a poverty-alleviation tool into what he calls «corporate welfare.»
The move targets a provision first enacted in the Tax Cuts and Jobs Act of 2017 and made permanent last year. Opportunity Zones were designed to draw investment into low-income and rural communities by offering deferrals, reductions, or outright elimination of capital gains taxes on qualifying investments. Hawley said the zones were intended for «low-income areas, low-income housing, low-income businesses or businesses in low-income areas.»
«These data centers have figured out a way that they think that they can access all of this money,» Hawley said. «So let's be clear, this is a form of corporate welfare. They don't need any welfare. These people are rich, they can pay their own way.»
According to the Department of Housing and Urban Development, 8,746 Opportunity Zones now exist across the United States, with just under half located in rural areas. A report from the National Community Reinvestment Coalition found that 14 percent of all data centers are in Opportunity Zones, while more than 17 percent of permitted, approved, or under-construction data center projects are in the zones.
The bill would explicitly exclude data centers from accessing the tax cuts, adding a federal barrier intended to slow their rapid development. It arrives as Congress faces mounting pressure to address artificial intelligence, a technology that depends heavily on data center capacity.
Concerns in the Capitol intensified after engineers at Anthropic warned publicly that there was roughly a 10 percent chance AI could wipe out humanity within a decade. The warning followed calls from major AI industry players for a slowdown in development. Yet legislative action has been scarce. Three years ago, Senate Minority Leader Chuck Schumer, D-N.Y., convened panels with technology CEOs, including Tesla's Elon Musk and Meta's Mark Zuckerberg, to discuss possible AI legislation. Since then, little has advanced.
Hawley argued that Congress must at least establish guardrails for AI and give people the ability to sue technology companies if their data and personal information have been used without consent. Asked why no real action followed Schumer's summits, Hawley said it was «because all the tech CEOs then promptly gave Schumer and the Democrats gobs and gobs money, and they decided that, you know what, maybe this industry is going fine.»
He added that the same executives now seek an antitrust exemption so they can coordinate. «Any regulations, they want to write them themselves,» Hawley said. «And they're out there saying, 'The sky is falling, the sky is falling. You need to let us get together, write the regulations and figure out what we're going to do.' I'm pretty skeptical of that, I have to say.»
The data center and AI issue has become a political wedge on the campaign trail, and President Donald Trump has dismissed the broader anxiety as a «hoax.» The debate places a tax incentive created to help forgotten communities against an industry whose energy and land demands have reshaped local politics, particularly in rural areas where many of the zones are located.
Hawley's proposal would not eliminate Opportunity Zones. It would narrow their use by barring a single, fast-growing industry from the benefit. Whether that restriction gains traction in a Congress that has struggled to agree on AI policy remains uncertain, but the bill gives critics of data center expansion a concrete federal target.
