Friday charts: The Ramsey rule of data centers

When a tax collector looks at an airport, what they see is a giant ATM.

Airports generate property tax, income tax, and payroll tax, of course. But that’s just the cover charge.

At Pittsburgh International Airport, for example, there’s an extra 11.5% tax on parking (in addition to the usual sales tax). At Chicago O’Hare, “concession recovery fees” and “customer facility charges” can add as much as 50% to the cost of renting a car.

At every airport, passengers pay a 7.5% federal excise tax on the price of their ticket, a $5.30 “per-segment” fee for each takeoff and landing, a $4.50 “passenger facility charge” for each airport they depart from, and an $11.20 TSA fee per round trip. All told, a $150 flight might cost another $60 in fees and taxes.

The numbers add up fast. In 2025, Dallas Fort Worth International Airport paid an estimated $14 billion in federal taxes, $5 billion in state taxes, and $3.4 billion in local taxes. 

(It also has a 5% “venue tax” on rental cars that helps pay for the Dallas Mavericks’ basketball arena.) 

But the planes that flew in and out of Dallas? They might not have paid any.

Specialized leasing companies own about half the world’s fleet of commercial airplanes, and most of these companies are legally based in Ireland where corporate income tax is 15%. After deductions for depreciation, the effective tax rate on income earned on these airplanes is approximately zero.

That is a very good deal, of course, and the reason airplanes have negotiated it is that they can easily be moved.

The reason airports get such a bad deal on taxes is that they cannot be moved. Dallas Fort Worth International Airport can only be in Dallas Fort Worth.

This is the “Ramsey rule” of optimal taxation. Immobile assets like airports, power plants, oil fields, hotels, and parking garages get taxed the most because they have no negotiating leverage. However much we tax them, they can’t leave. Mobile assets like airplanes, cargo ships, intellectual property, and wealth get taxed the least because they can shop around for a better deal.

So tax collectors are generally keen to attract big, immobile assets. Like data centers.

Taxpayers, however, are not so keen.

Nasdaq crashed this week because the midterm election results suggest that data centers may no longer be welcome in the United States. Across the country, 47 ballot measures gave voters the opportunity to restrict or ban data centers in their communities. 46 of them passed.

This is unwelcome news for tax collectors who have so far missed out.

In Richland Parish, LA, tax revenue from a Meta data center funded $50,000 bonuses for public school teachers. In Hoffman Estates, IL, tax revenue from a Microsoft data center will help pay for new fire stations. In Effingham County, GA, tax revenue from an OpenAI data center will fund a 40% reduction to local property taxes. In Loudoun County, VA, property taxes have declined every year for the past decade thanks to the revenue generated by its many data centers.

Loudoun County officials estimate that data centers pay $26 in tax revenue for every $1 they consume in services.

Judging by the markets’ reaction to the midterms, you'd think no one will want to take that deal anymore.

But that’s probably not the case.

Data centers remain welcome in Harwood, ND, at least — the one place where voters rejected a ballot measure restricting their construction. They seem happy with the one currently under construction. “The sales tax and property tax, for our little town, is just incredible for us,” Mayor Blake Hankey said this morning, adding that the data center is also expected to create over 200 permanent jobs.

The population of Harwood is 820.

Data centers remain welcome in Alabama, too, where incoming Governor Tommy Tuberville is eager to strike a deal. “We’re going to do data centers,” Tuberville said earlier this year. “The tax money that comes from those things is unbelievable for schools, for law enforcement, for anything that’s done.”

The governor-elect has also said he’ll put data centers in the state’s highest tax bracket. Like local utilities, data centers will pay 30% of the value of their property. 

Imagine paying 30% of the value of your home in taxes. Every year!

If you were as immobile as a data center, you might have to.

Let’s check some charts.

The people have spoken:

In Nottingham, NH, a moratorium on data center permitting passed with 90.3% of the vote. In Spring Township, OH, zoning restrictions squeaked by with 52.6% of the vote. The sole vote in favor of data centers was decisive, though: Harwood, ND, voted 3:1 to reject restrictions.

Midterm survey:

Data centers were an issue beyond the specific measures. Nationally, about 56% of voters rated data centers as a crucial or major factor in their votes for Congress.

Not the top issue, though.

AI and data centers ranked well below cost of living, the war in Iran, ICE, and corruption.

Why, though?

Voters said their top concern about data centers was “effect on resources,” including water and power usage. Fortunately, modern data centers use about the same amount of water as a local restaurant and, in some cases, they lower the cost of electricity for consumers. 

The tippy top tax bracket:

The Tax Foundation estimates that a data center in Santa Clara, CA, would pay roughly $22 million of tax on $33 million of income. An effective tax rate of 67%! I’d welcome that in my backyard.

It’s not just the property taxes:

When a money-making object is immobile, the taxes get piled on. In addition to property, corporate, and sales taxes, data centers pay Gross Receipts Tax (applied to revenue rather than income, ouch) and Tangible Personal Property Tax (tax on the value of everything inside the data center, like servers, GPUs, and back-up generators).

Made in the USA:

The US houses a majority of the world’s data center capacity. But maybe not for long. If data centers feel unwelcome in the US, they’ll look harder at places like Malaysia. Or outer space! The midterms have made Elon Musk’s plan to build data centers in space seem a little less quixotic.

Jobpocalypse never?

AI does not seem to be putting many humans out of work. After this morning’s data, economist Jason Furman said “this might be the best — or among the best — job markets we've ever had.” 

Techpocalypse now: 

Thursday’s 4.4% selloff in the S&P 500 was among the worst 0.5% of down days on record.

That might have been the correct reaction: The stock market has gotten leveraged to the hyperscalers’ giant investments in data centers and data centers will be harder to build now.

But someone will want to take their money, I’m sure.  And there’s always outer space, if not.

What’s the top tax bracket on the moon, I wonder?

Have a great weekend, mobile readers.

— Byron Gilliam

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