Data center firm addresses proposed tax policy change
It’s important to have an accurate understanding of the data center tax policy bills before the Michigan Legislature.
If passed, the legislation means Switch, a Nevada-based high-tech company seeking to expand our business, can build our new eastern U.S. data center ecosystem in Michigan.
If Michigan doesn’t pass the legislation, it means we can’t come to Michigan because our clients won’t and the reason is simple: More than 20 other states have passed the same set of data center tax policies being considered in Michigan.
So why wouldn’t Switch go to one of the other states? We fell in love with Michigan for the same reason Michiganders love this state. It would be easier for us to choose a neighbor like Indiana, Ohio, New York, Indiana or Minnesota with tax policies already favorable to our clients and the SUPERNAP facility proposed for Grand Rapids.
We want to build our next SUPERNAP data center at the Steelcase pyramid in Grand Rapids. It would be the largest data center in the eastern U.S., with 1,000 workers, a $400 million construction budget and $5 billion in total investments estimated over a decade. But people, community and talent aside, we need to make a business decision that works for our clients.
While we have found overwhelming support, some people are raising concerns that range from valid to wildly unfounded and wrong. For Michigan taxpayers and leaders, it’s important to address some of those concerns.
A few people have labeled the data center tax policies we seek “corporate welfare.” That’s wrong. Other states do not apply sales and use taxes and personal property taxes to the computers our clients purchase and are constantly changing in and out of our data center. Our clients need the same exemption in Michigan to level the playing field.
A few people say SUPERNAP Michigan won’t generate jobs. More than 6,500 people work in our Nevada campuses. Most work in the data center on behalf of our clients — including Intel, Shutterfly, Dreamworks, HP, Sony, Cisco, Google, Amazon, Time Warner, Activision (Call of Duty), Fox Broadcasting, eBay and more. They work installing servers, architecting their IT and managing the infrastructure that runs the country’s largest businesses. More than 35 percent of them have Nevada driver’s licenses; the others are employees of our clients, who commute from other states.
Michigan is behind in preparing for the innovation economy. Some 22 states have enacted tax policies that attract the tech industry. If Michigan matches the policies of the states seeking companies like ours, we believe that in the next several years we will make Switch Grand Rapids the most powerful technology ecosystem in the eastern United States.
Adam Kramer is executive vice president of strategy for Switch.