Democrats are now running against data centers.
This is smart politics, given how unpopular the internet warehouses have become.
Whether this is smart policy, well, that’s a different matter entirely, one we’ll have to deal with another day. However, no policy gets made if candidates don’t get elected, so let’s look at what Democrats are saying — specifically congressional candidates Tom Perriello in the 5th District and Beth Macy in the 6th District, who have both now made data centers part of their campaigns.
In both cases they have made specific charges about their Republican opponents — incumbents John McGuire and Ben Cline — that can be fact-checked.
The charge: Perriello says ‘McGuire voted for a $362 billion corporate tax break for data centers.’
The facts: McGuire voted for a more general corporate tax break that data centers are using.
This is one of those charges that is true but selective. Perriello is referring to tax breaks in HR 1, aka the “One Big Beautiful Bill.” These aren’t specific to data centers, they apply to any manufacturer — although Politico recently reported that tech companies have been the main beneficiaries of them.
“The law made it possible for companies to frontload the deduction of the full cost of new equipment from their taxes, a huge benefit for technology companies known as ‘hyperscalers’ that are driving the data center boom across Virginia and the country,” a statement from Perriello’s campaign said.
Here’s how Politico reports what’s going on: “The tech world is pouring oceans of money into chips, data centers, power supplies and other components of the artificial intelligence infrastructure. And that’s eligible for generous tax breaks on investments Republicans included in their 2025 tax cuts. The tax incentives weren’t designed with AI in mind specifically — they’re available for all kinds of business investments. But it’s the tech industry that’s making the most of them, putting a major dent in corporate tax receipts.”
The Democratic criticism is that tech companies don’t need this tax break, that they’d be investing in AI-related technology anyway, so this tax provision amounts to a giveaway that is costing the national treasury and driving up the national debt.
The National Association of Manufacturers backed HR 1, partly because of that provision, which it said would “supercharge manufacturing.”
So far, that hasn’t happened, though. The U.S. Bureau of Labor Statistics shows that the number of manufacturing jobs in the U.S. is almost exactly the same as it was before the bill was passed.
In Virginia, the number of manufacturing jobs has declined, from 239,100 in June 2025 (the bill became law the next month) to 229,300 in July 2026, the most recent statistics available. Data at the local level is harder to find, but the Federal Reserve says that manufacturing jobs have declined over the past year in the two biggest metro areas in the 5th District, Charlottesville and Lynchburg.
This seems to be a case where the intent of the provision and its actual application are two different things. Its intent was to boost manufacturing; instead, it’s boosted tech companies — some of which are manufacturing companies, just not in ways we usually think of. We’ll come back to this point later, but it’s not as if there was a specific bill to give tax breaks for data centers that McGuire voted for. Instead, he voted for HR 1, which included a provision aimed at manufacturers that data center companies have used.
The charge: Macy says Cline has “voted three times to let data centers pay no sales tax, sticking us with the bill.”
The facts: That’s true. Those votes were also 10-18 years ago when the context was different.
These three votes are all when Cline was in the General Assembly, not Congress. Now we’re getting back to the origin of the data center boom in Virginia.
HB 1388 in 2008 was the first tax data center tax bill in Virginia. It was introduced by Del. Tommy Wright, R-Lunenburg County, when Virginia was in contention for an Apple data center that was looking at Mecklenburg County. Wright’s bill created a sales tax exemption for data centers that located “in a Virginia locality having an unemployment rate above 4.9 percent for the calendar quarter ending November 2007” and created “at least 100 new jobs paying at least twice the prevailing average wage in that locality.”
The bill — framed as a way to lure a tech industry to an economically distressed part of rural Virginia — was so noncontroversial that it passed the House of Delegates 97-2 and the state Senate 40-0. Yes, even state Sen. Louise Lucas, D-Portsmouth, who has become the most vocal opponent of data centers, voted for it. Gov. Tim Kaine, a Democrat, signed the bill into law.
Apple eventually passed over Mecklenburg in favor of North Carolina but the county did later land Microsoft.
Virginia’s loss of Apple in 2009 spooked state leadership. There was a strong feeling that Virginia was falling behind North Carolina economically. The economy then was weak — this was the era of the Great Recession — and Republican Bob McDonnell won the 2009 governor’s race on the slogan “Bob’s for Jobs.” Come the 2010 General Assembly session, Del. John O’Bannon, R-Henrico County, introduced a bill — HB 302 — to expand the tax break for data centers statewide.
This bill was also so noncontroversial that it passed the House 97-0 and the Senate 40-0 (again, with Lucas as one of those 40). McDonnell signed it into law. The intent was to make Virginia competitive in creating a technology economy and it worked — maybe too well, some might see it now. The state’s data center boom owes its origin to this measure.
The third data center vote that Macy cites is SB 64 in 2016. That year, state Sen. Frank Ruff, R-Mecklenburg County, introduced a bill to extend the sunset date on the state’s tax break for data centers from 2020 to 2035. This was before the state’s data center boom had really kicked in, and note that the sponsor was from Mecklenburg County, home to that Microsoft data center — the tax revenue from which has enabled the county to build new schools.
This bill also wasn’t controversial. It passed the Senate 40-0 — another Lucas vote — and the House 97-1.Gov. Terry McAuliffe, a Democrat, signed it into law.
Those were the three bills that brought us to where we are today. To find Cline’s vote for those bills wrong, you have to go back in time to ask if they were wrong at the time, with the facts available. Virtually no other legislator at the time thought they were.
When Macy says these votes resulted in “sticking us with the bill,” we get to some parsing. The state’s data center boom, for which these bills were responsible, has definitely increased energy demand. How much of your electricity bill increase is due to data centers is a matter of some dispute. Some studies (such as this one by the Environmental and Energy Study Institute) say data centers are definitely driving up energy rates. However, the Thomas Jefferson Institute for Public Policy contends that what’s driving up higher power bills is the investment in new power generation that’s been mandated by the Clean Economy Act, not data centers.
Most of the Roanoke Valley is served by Appalachian Power, which has very few data centers, yet it’s rates have been going up, which suggest something other than data centers is to blame there. Meanwhile, a state study by the Joint Legislative Audit and Review Commission found that if data centers kept growing, they would definitely drive up electricity bills in the years to come. However, the popular impression is that data centers are what’s causing electricity rates to rise now, whether that’s 100% so or not, so the “sticking us with the bill” line probably resonates no matter how complciated the facts may be.
What Macy doesn’t get into, but which is implicit in any criticism of the sales tax exemption, is whether these tax breaks are a giveaway or an investment. The latest estimates from the state show that Virginia forgoes $1.9 billion of revenue a year due this tax exemption; the state also estimated two years ago that data centers add $9.1 billion to Virginia’s gross domestic product each year and employ about 74,000 people a year with $5.5 billion in labor income. Would it have been better for Virginia not to grow this industry? Should we have kept the tax exemption the way it originaly was when it only applied to data centers that located in economically distressed areas? Or has, on balance, Virginia benefitted from becoming a technology capital with data centers as part of that tech portfolio? If we eliminate the sales tax exemption now, does that mean Virginia suddenly gets to collect $1.9 billion more? Or does it mean that the data center industry will shift away from Virginia and we simply won’t be collecting those taxes in the years to come? That takes us out of the realm of fact-checking and into the realm of opinion, and opinions vary.
Reality check 1: Economists say data centers are propping up the economy.
This may or may not be a good thing. This goes back to what you think of data centers. However, it does seem to be a fact that data centers and related technologies are what’s driving the economy right now. ING Global Market Research, a Dutch financial multinational, issued a report this summer that concluded that AI now represents one-third of the U.S. economic growth in 2026. Likewise, an economic forecast issued recently by the University of Virginia’s Weldon Cooper Center for Public Service also highlighted AI’s role in the economy. “The national economy enters the middle of 2026 with growth and slightly stronger momentum than earlier in the year,” the report said. “The stronger outlook reflects increased artificial intelligence-related investment, particularly in information technology, software, and data centers.”
We obviously shouldn’t pursue an industry we don’t want. However, those who call for data center moratoriums — such as Macy — don’t account for what the implications of such a pause would be. Some of those implications are undoubtedly good ones — less pressure to produce more energy and less pressure on finite water supplies. But some of those implications are economic ones, too. We don’t seem to have much conversation about those.
Reality check 2: Neither the 5th nor 6th has many data centers. At least not yet.
Macy says “they’re trying to pave over our land with data centers.” I’ll just gently point out that all these sales to data center companies involve willing sellers. The same point applies to Republicans upset about solar farms. Nobody’s condemning land for either.
The implications of data centers extend statewide. However, there aren’t many in either of the districts where Perriello and Macy are running. A map by the Piedmont Environmental Council shows only one operational data center in the 6th District, although more are planned. It doesn’t show any in the 5th District, although we know there is the Microsoft complex in Mecklenburg County, and Stack Infrastructure has pledged to bring 2,500 jobs to a data center complex at the Southern Virginia Mega Site in Pittsylvania. These candidates’ use of the data center issue, though, does show how potent it’s become — and how unpopular these facilities have become in a relatively short period of time.
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