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Tech companies seek tax breaks for data centers

Associated Press The Spokesman-Review

SEATTLE – Microsoft Corp. and other technology companies are asking for tens of millions of dollars in tax breaks as a condition for building more data centers in Eastern Washington.

Microsoft and Yahoo Inc. already have data centers filled with servers in Quincy, in Grant County, but they halted plans to build more when Washington’s Department of Revenue recently said the centers aren’t eligible for an existing tax break for rural manufacturers.

“States such as Iowa and others have come on board with very attractive tax incentive packages to get data centers to locate in their communities,” said DeLee Shoemaker, Microsoft’s state government affairs director.

“Washington state is no longer competitive for this type of business.”

In response, Gov. Chris Gregoire requested an exemption that would eliminate half the state sales tax on replacement equipment for the mammoth server farms.

The exemption wouldn’t affect this year’s state budget, but would cost about $32 million in the next two-year period and $43 million in the 2011 to 2013 period.

Microsoft has lobbied for a 100 percent sales tax exemption.

Critics said Eastern Washington’s low-cost land and clean power sources already make it an attractive location for data centers without a tax break.

During construction, data centers employ between 500 and 600 workers; after completion, they require 20 to 30 workers.

The companies also pay property taxes.

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