Will the Tax Man Force Mega Data Centers to Literally Go Mobile?

Mega data centers are booming but operators from Microsoft to the NSA are learning something about the 'bust' side of the equation. It turns out big data centers can be big targets for the tax man.

In August 2009, Microsoft's blog for the Azure platform announced, "In the next few weeks, we’re going to disable the “USA - Northwest” option for new applications. Existing applications will continue to run unaffected, and you’ll continue to be able to modify and update your existing applications...This change is in preparation for our migration out of the northwest region. Due to a change in local tax laws, we’ve decided to migrate Windows Azure applications out of our northwest data center prior to our commercial launch this November."

Microsoft's blog post did not reply to a comment requesting explanation of the tax issue, although tax policy for mega data centers in Washington state have been controversial ever since the Seattle Post Intelligencer reported, "Microsoft and a handful of other tech giants are quietly securing a state tax break that could be worth more than $1 billion through legislation forged amid corporate threats and an interstate bidding war for computer server farms that have become the backbone of the Internet." Some observers have also tied Yahoo's decision to suspend work earlier this year on its Washington data center to the tax issue.

Loose Bolts blogger Mike Manos responded with a vision in which "...the cloud will need to be on the move, even if its a slow move. Because just as there are forces looking to regulate and control the cloud, there are also forces in play where locales are interested in attracting and cultivating the cloud....A giant cat an mouse game on a global level...you might see certain types of load compute or transaction work moving around the planet to align with more technically savvy or advantageous locales..."

For another example, consider the National Security Agency (NSA), which was attracted to Utah by the State's cheap energy costs. The Salt Lake City Tribune reported in May 2013, "Under a bill the 2013 Utah Legislature passed, the National Security Agency’s new Bluffdale data center might be taxed on the millions of dollars of energy it is expected to consume, providing a potential windfall for an obscure state authority. The NSA is protesting the possible tax, even though a Utah attorney said he informed the agency about HB325, and the top U.S. electronic spy agency voiced no opposition until an official emailed Gov. Gary Herbert’s staff weeks after Herbert signed the measure...HB325, which Herbert signed into law April 1, benefits the Utah Military Installation Development Authority (MIDA). It allows the entity, which was set up to put select military properties on the public tax rolls, to collect a tax of up to 6 percent on Rocky Mountain Power electricity used by the Utah Data Center."

Maybe those modular server containers used by mega data centers will give whole new meaning to the term 'mobile computing'. And then there is always that Google patent for a sea-going data center.