Wyden Drafts a New Federal Tax on Data Centers 11 Days Before the Midterms. Indiana Has Billions Riding on It.

Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee. Photo: U.S. Senate Photographic Studio (public domain, via Wikimedia Commons).

Official 117th Congress portrait of Sen. Ron Wyden by the U.S. Senate Photographic Studio; public domain, via Wikimedia Commons.

Drive past the Amazon Web Services campus spreading across the farm fields near New Carlisle and you are looking at $13.8 billion. That is what Amazon says it has put into its St. Joseph County data centers since 2024, according to 13 Investigates at WTHR. Eleven days before Election Day, the Senate's top tax-writing Democrat put out a plan to send a cut of what operations like that one take in to Washington, every year.

On Friday, Sen. Ron Wyden of Oregon, the ranking member of the Senate Finance Committee, released draft legislative text for a data center tax package that “establishes an excise tax on data center operators and removes unnecessary tax breaks for data centers, such as bonus depreciation, opportunity zone benefits and research and development tax credits,” according to the committee's announcement. Alongside it came the Stability and Opportunity for Workers Act, an overhaul of unemployment insurance cosponsored by Senate Democratic Leader Chuck Schumer and Sens. Michael Bennet of Colorado and Elizabeth Warren of Massachusetts.

Democrats are the minority on the committee, where Republicans hold the gavel, so nothing in the package moves without GOP votes. That is exactly why the timing matters. Roll Call described the bills as an early signal of what Democrats would prioritize if they win back the Senate.

What the tax would actually do

The idea has been on the shelf since August, when Wyden's Democratic staff floated it in a white paper that called the current data center incentives “unnecessary and wasteful.” The paper proposed a “Data Center Public Investment excise tax,” a tax on the gross receipts of data center operators charged “at a low single-digit rate.” It said the burden “will fall most heavily on the major hyperscalers,” the handful of tech giants doing most of the building, and pegged their data center spending at roughly $700 billion this year.

The same paper laid out how Washington would keep companies from slipping out of it. The biggest players would pay on whichever is higher, their actual receipts or a “deemed minimum” figured from the cost of running the facility, including electricity, wages and rent, plus a profit markup. Data centers in orbit would be taxed too. And the staff wrote that all of this should be “additions to, rather than alternatives for,” higher corporate income tax and stock buyback tax rates. Law360 reported Friday that the draft carries the excise tax and the limits on incentives into bill language.

Watch the grandfather clause. Under the white paper, the share of a data center's equipment placed in service before 2024 would be exempt “for all but the largest actors,” because the boom “was kicked into high-gear by the end of 2023.” The final bill could shift those details, but as written the cutoff falls right about where Indiana's building spree took off.

Indiana has more riding on this than most

Meta broke ground in February on a campus of $10 billion or more in the LEAP District near Lebanon, which the state says will support about 300 operating jobs and more than 4,000 construction jobs at its peak. Meta calls it a 1-gigawatt facility. Add Amazon's project near Lake Michigan and Google's $2 billion site in Fort Wayne, both listed by Louisville Public Media, and few states have tied as much of their economic future to these buildings.

Hoosiers have already paid to land them. WTHR found more than $655 million in reported state sales and use tax exemptions for data centers, with Amazon alone reporting about $561 million in 2025. St. Joseph County economic development director Bill Schalliol defended the local deal to the station plainly: “You've got to give a little to get a little.”

A federal excise tax would not care what Indiana gave away to win these projects. It would sit on top of whatever the companies pay here, and the money would go to the U.S. Treasury, not to Boone County or St. Joseph County.

Where the money would go

Wyden's staff wrote that a priority for the revenue should be “to directly aid those adversely affected” by the spread of artificial intelligence. The companion bill shows what that looks like: new federal minimum standards for unemployment benefits, longer benefits during downturns, a “jobseeker's allowance” that reaches gig workers, and a new Transition Wages program to support AI-displaced workers while they retrain, per the committee.

“Americans feel the looming fear of AI job losses, and Congress has a responsibility to help the country prepare,” Wyden said in the release.

For a state that runs its own unemployment system, the phrase “new minimum standards” is the one to read twice. A federal floor would hand part of a decision states make today to Congress, paid for by a tax on an industry Indiana went out of its way to recruit.

The case against

Republicans have been warning about this kind of tax for months. Sen. Mike Rounds, R-S.D., who co-chairs the Senate AI Caucus, said in June, as quoted by Roll Call: “If you start to tax it, you slow it down, and it goes elsewhere, or it does not move as fast as it will in other parts of the world. That's not good for America.” He added that he would rather see those decisions made here “rather than in China.”

Indiana's Sen. Todd Young sits on the Finance Committee. We found no public response from him to Wyden's draft as of Friday night, but at a Greenwood luncheon late last month he staked out a different approach, telling local business leaders that decisions about data centers belong to residents at the local level, The Republic reported. “They (data centers) need to give up a bigger piece of the pie to locals, and they'll convince more locals,” Young said. “But as a national imperative, we need data centers for our national security, for our global productivity and competitiveness.”

Strip away the bill numbers and that is the real disagreement. Few Hoosiers think Big Tech deserves a free ride; the sales tax tab only came to light after a watchdog group pressed for it, and more than 200 people from 40 counties showed up to a Hoosier Action hearing on data centers this spring, according to LPM. The open question is who collects when the companies pay more: the towns living next to the server farms, or a federal program run out of Washington. Wyden just put his answer in writing.

Written by Hoosiers, for Hoosiers.