3 ms·

Why don't they pay much in taxes? hyperscalers are pretty profitable.

zdragnar 5mo ago
The hyperscalers aren't making sales directly from the data center, so there's not much to tax other than the land value, the electricity they use, and the few employee salaries. You'd need some sort of data ingress/egress tax.
- oersted 5mo ago
  The idea of having what equates to trade tariffs for data transfers sounds horrifying. But to be fair, we are kinda suffering similar charges already from all major cloud providers, and we seem to be okay with it... Still horrifying, but not entirely unprecedented I suppose.
- vessenes 5mo ago
  Interesting. Just checked some numbers. So Coreweave has like $3bn in operating cashflow last quarter. Your point is that after we are done with all the capex/interest rate deductions/etc and look at a steady state business for a given CoreWeave datacenter, that net income won't be marked locally to a given datacenter. Is that true though? If a Delaware corp is operating in most states, I believe they must file as a foreign corporation in that state; I'm surprised GAAP would not require them accruing some of this income to the locations that provided the work to do the income.
palmotea 5mo ago
> Why don't they pay much in taxes? hyperscalers are pretty profitable. I wouldn't be surprised if those profits are re-imagined as costs paid to some entity in a tax-haven. Also there's different kinds of taxes. IIRC, local communities get their revenue from sales taxes and property taxes. A data center doesn't sell anything, so they probably get zero from that. I don't really know how they'd factor into property taxes, because they're a blight and I don't know how the locality would assess their value without comparable transactions.
- hylaride 5mo ago
  Many jurisdictions have lower property taxes for certain kinds of industrial/commercial zoning in the name of bringing in jobs, etc. You sometimes see clusters of businesses at border areas of jurisdictions for this reason. Sometimes it's other advantages. Bottled water companies often take advantage of cheaper municipal water for "industrial" use, for example.
GuestFAUniverse 5mo ago
Where? What do you tax? Per request? They will shuffle most gains around to the place with the lowest taxes. E.g. by internally buying and selling (overpriced) services. The only realistic tax is coming from the jobs that serve those data centres (builders, maintenance, that little IT staff left for on-site jobs). And those are rather low margin jobs.
- jfyi 5mo ago
  >What do you tax? Physical infrastructure inputs and negative externalities. For example: electrical grid strain, water table consumption for cooling, and local pollution/carbon footprints.
- sbayg 5mo ago
  Don’t forget security guards. These data centers will be a huge target for both thieves and saboteurs. Unless the ai promoters are right that AI will be a great thing for everyone and not at all a source of societal and political strain.
- criddell 5mo ago
  Tax per megawatt, decibel, and gallon of water. That would provide incentives to reduce power consumption, noise, and water use.
notrealyme123 5mo ago
Because company profits are booked at their European HQ (so Ireland or Luxembourg). So there is little profit being taxed at the Datacenter/country Level.

The hyperscalers aren't making sales directly from the data center, so there's not much to tax other than the land value, the electricity they use, and the few employee salaries. You'd need some sort of data ingress/egress tax.

oersted 5mo ago
The idea of having what equates to trade tariffs for data transfers sounds horrifying. But to be fair, we are kinda suffering similar charges already from all major cloud providers, and we seem to be okay with it... Still horrifying, but not entirely unprecedented I suppose.
vessenes 5mo ago
Interesting. Just checked some numbers. So Coreweave has like $3bn in operating cashflow last quarter. Your point is that after we are done with all the capex/interest rate deductions/etc and look at a steady state business for a given CoreWeave datacenter, that net income won't be marked locally to a given datacenter. Is that true though? If a Delaware corp is operating in most states, I believe they must file as a foreign corporation in that state; I'm surprised GAAP would not require them accruing some of this income to the locations that provided the work to do the income.

palmotea 5mo ago

> Why don't they pay much in taxes? hyperscalers are pretty profitable. I wouldn't be surprised if those profits are re-imagined as costs paid to some entity in a tax-haven. Also there's different kinds of taxes. IIRC, local communities get their revenue from sales taxes and property taxes. A data center doesn't sell anything, so they probably get zero from that. I don't really know how they'd factor into property taxes, because they're a blight and I don't know how the locality would assess their value without comparable transactions.

hylaride 5mo ago
Many jurisdictions have lower property taxes for certain kinds of industrial/commercial zoning in the name of bringing in jobs, etc. You sometimes see clusters of businesses at border areas of jurisdictions for this reason. Sometimes it's other advantages. Bottled water companies often take advantage of cheaper municipal water for "industrial" use, for example.

GuestFAUniverse 5mo ago

Where? What do you tax? Per request? They will shuffle most gains around to the place with the lowest taxes. E.g. by internally buying and selling (overpriced) services. The only realistic tax is coming from the jobs that serve those data centres (builders, maintenance, that little IT staff left for on-site jobs). And those are rather low margin jobs.

jfyi 5mo ago
>What do you tax? Physical infrastructure inputs and negative externalities. For example: electrical grid strain, water table consumption for cooling, and local pollution/carbon footprints.
sbayg 5mo ago
Don’t forget security guards. These data centers will be a huge target for both thieves and saboteurs. Unless the ai promoters are right that AI will be a great thing for everyone and not at all a source of societal and political strain.
criddell 5mo ago
Tax per megawatt, decibel, and gallon of water. That would provide incentives to reduce power consumption, noise, and water use.

notrealyme123 5mo ago

Because company profits are booked at their European HQ (so Ireland or Luxembourg). So there is little profit being taxed at the Datacenter/country Level.