Derrick R. Clay is president and CEO of the Columbus Chamber of Commerce.
Recent figures from the Ohio Department of Taxation could be read as cause for renewed discussion.
The state’s sales tax exemption for data centers is projected to cost far more than originally expected, giving some critics in today’s active data center debate reason to question whether the policy is delivering sufficient value.
But it is important to consider the broader context.
When a tax exemption is tied to private investment, a higher cost also shows that more companies are choosing Ohio, and more capital is flowing into the state. The question is whether Ohio is getting a strong return in tax revenue, jobs and infrastructure for the next economy.
That is why data centers matter.
AI is part of our ‘picture’
They are part of the backbone supporting manufacturers, hospitals, schools, logistics networks, public safety, research, medical breakthroughs and the secure systems modern life depends on.
AI is part of that picture, but so is whether America will have enough domestic infrastructure to remain productive, resilient and prepared.
Ohio is already proving it can help answer that question. Brookings identifies the Columbus region as a “Star Hub” in the AI economy, citing talent, innovation and enterprise adoption.
Amazon Web Services is one clear example.
Ten years ago, AWS planted its flag in central Ohio, helping validate the state as a home for cloud and AI infrastructure. Amazon now reports nearly $40 billion in data center investment here, and other companies have followed. As demand rises, Ohio has become a leader in attracting digital infrastructure investment.
The stakes are high
According to the Ohio Chamber of Commerce Research Foundation’s economic impact study, the results are strong.
The industry generated substantially more in state and local tax revenue than it received in incentives, returned about two dollars for every public dollar invested and supported tens of thousands of jobs.
That point matters because the sales tax exemption applies on the front end, when equipment and construction materials are purchased. The investment it helps attract can produce benefits for years, including property taxes for local schools, townships and counties, and income taxes from the construction crews, tradespeople, suppliers and workers tied to these projects.
At the same time, communities rightly want to understand how these investments translate into long-term local benefit – an important conversation as Ohio evaluates how to remain competitive while supporting local priorities.
The state’s exemption has contributed to that success. It reduces project costs and has proven important in site selection decisions. Private investment of this scale follows policy signals, available infrastructure, and confidence that a state wants to win.
Research commissioned by the Ohio Chamber suggests that significant changes to the exemption could reduce future capital investment, job creation, and state and local tax revenue over time.
The cost of the break is high because the economic activity it helped unlock is substantial and growing.
Ohio must use this time wisely
Legitimate questions remain about grid capacity, water use and whether future incentives should include stricter performance metrics and clawbacks.
These are important implementation and accountability conversations that should accompany growth. Under the right rate rules, additional investment can also help pay for electric grid upgrades needed to serve Ohio’s growth.
Gov. Mike DeWine’s pause on new data center tax exemption requests makes this a timely moment for review, reflection and evaluation.
Ohio should use the General Assembly’s study to improve accountability and local safeguards while protecting the competitive policy framework that helped attract this investment in the first place.
In an era when many states are still searching for the next economic engine, Ohio has turned a targeted tax break into a digital infrastructure growth engine that more than pays for itself.
Computing power is now part of the modern industrial base.
The increased cost projections reflect the scale of investment and growth occurring across the state, while also creating an opportunity to ensure policies continue delivering value for communities, workers, andbusinesses alike.
The opportunity ahead is to continue building a balanced approach that supports growth, strengthens communities and positions Ohio for long-term success.
Derrick R. Clay is president and CEO of the Columbus Chamber of Commerce.
This article originally appeared on The Columbus Dispatch: Data centers are key to Ohio’s future. We can’t forever scrap tax break| Opinion
Reporting by Derrick R. Clay, Guest Columnist / The Columbus Dispatch
USA TODAY Network via Reuters Connect
By Derrick R. Clay, Guest Columnist | USA TODAY Network
