The general election for Wisconsin governor is now a week old. But the past seven days of debate between the race’s Republican and Democratic candidates can be paraphrased in just two lines:
Both candidates are trying to surf the anti-tech wave — without fully betraying the AI boom’s beneficiaries.
Eric Levitzis a senior correspondent at Vox. He covers a wide range of political and policy issues with a special focus on questions that internally divide the American left and right. Before coming to Vox in 2024, he wrote a column on politics and economics for New York Magazine.
“My opponent is a shill for Big Tech who wants to build data centers over Wisconinites’ farms, parks, preserves, graves — and, possibly, Lambeau Field.”
“I know you are, but what am I?”
The Republican nominee, Congressman Tom Tiffany, has been the aggressor in this argument. Tiffany has branded his Democratic rival David Crowley as “Data Center David,” spotlighting the Milwaukee County Executive’s past support for turning Wisconsin into a “data hub” for “the entire globe.” In the Republican’s telling, Crowley is a corporate stooge eager to let Wisconsin’s “lakes run dry” and its “family farms” get “paved over,” just to generate higher profits for his Silicon Valley paymasters.
Key takeaways• Republican Tom Tiffany has made data centers the focus of Wisconsin’s governor’s race.• But his policies on hyper scale development aren’t much different than David Crowley’s.• Some Wisconsin labor unions and municipalities benefit a lot from data center projects.• Crowley and Tiffany have held off on embracing a moratorium for that reason.
Crowley has returned fire. The Democrat has insisted that every Wisconsin community should have veto power over any data center project within its territory — and that new computing campuses anywhere in the state must comply with strict regulations. Meanwhile, Crowley has argued that Tiffany is the race’s true corporate shill, noting that the member of Congress voted for tax cuts that benefit Big Tech (paid for with cuts to Medicaid and food stamps), permitting reforms that made data centers easier to build, and a ban on state and local AI regulations. “Congressman Tiffany loves data centers,” Crowley warned in a recent statement.
Meanwhile, it’s not clear how much they actually disagree on what they would do about the issue as governor.
The Wisconsin governor’s race has quickly become the most prominent flashpoint in the national war over data centers. And it’s not hard to tell which side is winning. On Tuesday, Josh Shapiro, the moderate Democratic governor of Pennsylvania, announced a suite of measures to slow and block “predatory” data center developments, after having previously led efforts to attract them.
If the public’s views on data centers are increasingly clear, the substantive issues remain unsettled. And the politics are more complicated than polling alone would indicate: Key constituencies in both the Democratic and Republican parties remain invested (literally and figuratively) in hyperscale development. Even as Tiffany and Crowley spar over who would do more to curb the data center menace, their actual policies quietly reflect these tensions.
How data centers became a flashpoint in Wisconsin #
On first glance, Crowley and Tiffany’s back-and-forth on data centers looks odd in multiple respects. For one thing, Republicans do not typically accuse Democrats of trying too hard to spur corporate investment — nor of doing too little to protect the environment. For another, Crowley and Tiffany seem to appear to largely agree about data center policy, which makes their emphasis on the issue sound a bit strange.
Upon closer inspection, however, Tiffany’s emphasis on the subject isn’t hard to understand.
Crowley just barely defeated socialist Assembly member Francesca Hong in the Democratic gubernatorial primary. And data center policy was among the key divides in that contest, according to Crowley himself: Hong championed a statewide moratorium on data centers, while Crowley merely favored imposing tight guardrails on their development.
What’s more, Crowley really did tout the potential benefits of data center development in the past. And he is closely allied with sitting Democratic Governor Tony Evers, who enacted large tax subsidies for new computing campuses in the state. Thanks in part to that largesse, Wisconsin witnessed a sudden wave of hyperscale (in other words, AI) data center development over the past two years.
Thus, by staking out a more (ostensibly) hardline, anti-data center position, Tiffany hopes to fracture the Democratic coalition — and isolate Crowley from the 76 percent of Wisconsin voters who say that the server farms’ costs outweigh their benefits.
In reality, however, the distinctions between Crowley and Tiffany’s positions on data center construction are much narrower than the latter’s attacks suggest. And to the extent that Crowley is more sympathetic to hyperscale development, this has less to do with his alleged fealty to Big Tech than his support for organized labor.
Crowley and Tiffany mostly agree about data centers #
Crowley and Tiffany’s positions on data centers heavily overlap.
Neither candidate supports a statewide moratorium. Both say that local communities should have the power to veto new computing campuses; that data centers must pay the full price of their energy needs (including the costs of any new power and transmission infrastructure that their consumption necessitates); and that companies should not be allowed to enter into nondisclosure agreements with local governments that temporarily conceal negotiations over new data center developments from the public.
Likewise, as their respective attacks suggest, Crowley and Tiffany were both friendlier to the AI industry in the past, before the backlash to artificial intelligence — and the infrastructure it requires — took off. Crowley really did express a desire for Wisconsin to become a global leader in artificial intelligence. Tiffany, meanwhile, has indeed voted to cut taxes on AI companies and shield them from state and local regulations. And the Republican is aligned with an even more unabashed champion of data centers than Evers, President Donald Trump.
Further, many of the distinctions between Crowley and Tiffany’s data center platforms reflect perennial left-right divides on other issues, rather than any difference in each candidate’s degree of chumminess with Big Tech.
For example, Crowley wants to require data center projects to finance new renewable energy installations — both so that they can meet their own power needs in a sustainable way and so that Wisconsin’s broader electric grid becomes less dependent on coal.
Tiffany also recognizes that data center development could be leveraged to fund new renewable energy. But he sees this as a bug, not a feature: After all, new solar and wind farms could eat up Wisconsin’s precious farmland, which Tiffany has sworn to protect. The Republican instead prefers for new data centers to run on coal, thereby propping up that embattled industry.
Crowley is more pro-data center in one way #
All this said, Tiffany’s platform is genuinely less pro-data center than Crowley’s in one respect: The Republican has promised to end all taxpayer subsidies for data centers in Wisconsin.
Crowley’s position is comparatively nuanced. In an interview with the Milwaukee Journal Sentinel in July, the Democrat said, “I do not believe Wisconsin should automatically roll back all data center tax incentives, but I do believe we need a more rigorous review of whether taxpayers are receiving sufficient value for the incentives being provided.”
In response to Tiffany’s recent attacks, Crowley has embraced far more adversarial rhetoric towards the tech industry in general and the AI sector in particular. And he has called for imposing a set of requirements on new data center development so numerous and profound, it is unclear whether many companies would be interested in pursuing new projects under his leadership, subsidies or no subsidies.
Nevertheless, as of this writing, Crowley has yet to abandon his July position on tax incentives. Instead, he has countered Tiffany’s charges on that front by noting that, in supporting Donald Trump’s tax bill, his Republican opponent effectively “signed over $70 billion in tax handouts to the same companies now steamrolling over our local communities with data centers.”
This is a fair hit. But it’s also a little evasive. How high the corporate tax rate should be federally — and whether Wisconsin should offer tax breaks to data center developments — are two different questions.
And Wisconsin’s subsidies to hyperscalers are not small. Under Evers, the state exempted large data center projects from sales taxes. This means that a data center developer need not pay taxes — to either the state or localities — on construction materials, IT equipment, on-site power infrastructure, cooling systems, or electricity.
Critically, these exemptions do not sunset: Tech companies don’t just avoid sales taxes when initially building their data centers. Rather, they pay no taxes on their facilities’ electricity consumption forever, while also avoiding any levies when updating their servers or other equipment.
All this adds up. According to a report from Wisconsin’s Legislative Fiscal Bureau, the state is poised to forgo $1.5 billion in sales tax revenue during the construction of certified data center projects, and then another $369 million annually after the facilities are fully operating. This is an especially sensitive issue in Wisconsin, where voters are still upset over an effort to lure tech manufacturer Foxconn to the state in Trump’s first term, a costly gambit that failed to deliver on its promised benefits.
To be clear, the Fiscal Bureau’s projections do not mean that data centers are likely to subtract billions of dollars from Wisconsin’s state and local budgets. Even if the hyperscale facilities are exempt from sales levies they must still pay property taxes. And their owners could owe corporate taxes while their construction workers and permanent employees will pay income taxes.
Their spending also generates business — and thus, income tax obligations — for other Wisconsin enterprises, such as utilities. On net, the projects will almost certainly increase the amount of revenue available to Wisconsin state and local governments. The debate is over whether the projects could have generated even more revenue, in the absence of subsidies — or whether these developments would have gone to a different state, had Wisconsin not made their funders such a sweetheart deal.
The evidence on that question is mixed. On the one hand, tax subsidies of some kind were plausibly necessary to spur hyperscale data center investment in Wisconsin. At present, 38 states provide tax incentives to data center developers.
On the other hand, Wisconsin’s subsidies are unusually generous. States commonly spare servers and capital equipment from sales taxes, but many do not extend that exemption to electricity. And the indefinite nature of Wisconsin’s subsidies is also far from standard. In nearby Illinois, data center projects enjoy a sales tax exemption for only 20 years.
Meanwhile, Wisconsin has some structural assets that might make it appealing to tech companies, even if it offered far lower subsidies. Due to its proximity to the Great Lakes, Wisconsin boasts abundant water. And it also has relatively cool temperatures, which limit hyperscalers’ cooling costs.
Crowley has not ruled out dramatically scaling back the state’s subsidies. But unlike Tiffany, he has thus far declined to endorse abolishing those subsidies in their entirety.
In Wisconsin, banning data centers is not the pro-union position #
At this point, you might be asking why Crowley doesn’t simply go “full populist” on data centers. Why give Tiffany any room to get to the Democratic Party’s left on this issue? Why not shore up your left flank by simply calling for a statewide moratorium — or at a minimum, for ending all data center tax breaks? After all, roughly three-quarters of Wisconsinites think the facilities are net harmful to the state.
In Tiffany’s telling, the answer to these questions is simple: Crowley is a bought-off puppet of the AI industry. But this is almost certainly wrong.
In truth, Crowley’s refusal to fully disavow data center construction likely reflects his ties to labor, not capital.
In his attack ad, Tiffany alleges that Crowley’s campaign is funded by “the people building” data centers and then flashes this image:
Tiffany’s claim is true — but in a misleadingly literal sense: The figure cited appears to be a reference to Crowley’s support from Wisconsin’s building trades unions. As of August 13, unions representing Wisconsin electricians, pipefitters, carpenters, construction workers, and other laborers had collectively contributed $412,000 to Crowley’s campaign. The Democrat has received no comparable support from corporate PACs of any kind, much less AI industry-affiliated ones.
The building trades are strongly supportive of data center construction — and for good reason. A data center serving OpenAI and Oracle in Port Washington, Wisconsin is being built through an explicit partnership with the Wisconsin Building Trades Council.
Separately, the Democrat has evinced concern for municipalities that do desire data center development, saying that Wisconsin can protect its ratepayers and environment “while also not preempting communities that have done their due diligence to allow for different types of economic development investments.”
For some Wisconsin communities, the fiscal benefits of data center development can be profound.
Consider Port Washington: In recent decades, the city’s manufacturing base shrank — and its business tax revenues declined with it. As a result, homeowners shouldered more and more of the burden of financing local government. But its new hyperscale data center promises to dramatically change its finances. According to the city’s Mayor Ted Neitzke, the project is expected to add between $1.3 and $1.8 billion in property value to a municipality whose entire existing valuation is scarcely over $1 billion.
By doubling the tax base, the data center could finance property tax cuts or public service expansions for Port Washington residents. Many of Wisconsin’s other post-industrial towns face similar challenges — and thus, could reap similar benefits from data center development. This may be why neither Crowley nor Tiffany have felt comfortable endorsing a moratorium, despite their increasingly populist rhetoric about data centers and AI.
For most voters, data centers aren’t central #
Add it up, and you have two candidates who are balancing the interests of the data center boom’s material beneficiaries against its growing political toxicity — and giving more and more weight to the latter.
It is unclear whether data centers will remain at the forefront of governors’ race as the campaign enters its homestretch. Although hyperscale facilities are increasingly unpopular in Wisconsin, they also are not a top-tier concern for the vast majority of the state’s voters. In a July poll from Marquette Law School, only 5 percent of Wisconsin voters named “data centers” as the state’s most important issue, putting it behind inflation, “illegal immigration,” health insurance, property taxes, “jobs and the economy,” and housing affordability.
Nevertheless, the fact that Crowley and Tiffany are sparring over who dislikes data centers the most — months after both expressed positive sentiments about the facilities — shows which way the wind is blowing.