American Intelligence
In late May, Governor Mike DeWine of Ohio abruptly suspended one of the policies most responsible for transforming his state into America’s emerging technology hub. Having once resisted the legislature’s efforts to eliminate a tax incentive for data centers, DeWine now suspended it by executive order.
The decision was framed as a temporary pause, but in reality, it was backlash. The press release announcing the directive, pausing new applications for the data center sales tax exemption — which is critical to purchasing equipment at scale — was intended to give the legislature time to “study the issue and bring forward facts about data centers.”
This decision came after DeWine championed a plan by Amazon Web Services to invest $10 billion in new computing infrastructure throughout the state, saying data centers were “critical to today’s modern economy” and previously vetoed a provision in the state’s operating budget to suspend the same exemption. At that time, DeWine argued that the state’s tax incentives had been an “asset in attracting new businesses to Ohio” and noted that data centers in particular had “led to billions in construction work.”
So, what changed during those intervening eleven months?
Not DeWine’s rhetoric. Even as he revived the suspension proposal, he continued to credit data centers with attracting businesses and jobs to the state. If true, it would seem the benefits of the tax incentive hadn’t changed dramatically either.
DeWine’s support for a White House-led ratepayer protection statement in January didn’t seem to herald a u-turn on the issue. Asking data centers to pay their own way on electricity is well within the mainstream of conservative policy, and DeWine’s remarks focused on expanding energy capacity to meet new demand, not suppressing demand.
What changed was the political climate.
There is a growing subset of public discussion that treats data centers as little more than giant boxes that consume electricity and raise utility bills. That’s understandable. Most people never see what happens inside them and data suggests utility bills may increase. But what that discussion often ignores is that data centers are rapidly becoming what factories once were to manufacturing states: the physical foundation of an entire economy.
Every AI model, cloud application, digital service, and emerging technology depends on vast amounts of computing power somewhere. That computing power has to live in a physical place. It requires land, energy, fiber optic networks, construction crews, engineers, suppliers, and billions of dollars in investment.
A century ago, cities competed for railroads because railroads determined where commerce would flow. Today, states are competing for the power to compute. Why? Because the principle is the same, the places that attract the infrastructure of a new economic era tend to attract everything that follows.
But protests against data center projects have erupted across the country, and a torrent of (overwhelmingly negative) news coverage has made the issue more salient than ever. Surveys from Gallup and Pew — both conducted in early 2026 — found the American public has become quite negative on data centers. In the Gallup survey, respondents were shown to be more likely to oppose a data center being built near them than respondents to a similar survey were to oppose a local nuclear plant.
The City of Cleveland announced that it had rejected a permit application for a proposed $1.6 billion data center. Signal Ohio, a new network in Ohio, ran an article about the fiscal impact of the data center tax exemption. Using numbers from the Ohio Department of Taxation, the outlet found that the foregone taxes from the data center exemption exceeded projections by hundreds of millions of dollars.
In and of itself, this was a perfectly reasonable topic for journalistic inquiry. But the article’s presentation of the issue was misleading.
The piece rolls out titanic dollar figures and frames them as a giveaway from the state instead of what they are: totally theoretical foregone revenue that would have never existed in the first place had the data centers not been located there.
The consequences from this conceptually confused piece even led one state senator, Kent Smith, to state that data centers “take over $1 billion of our money,” as if the state were shipping pallets of cash to Amazon.
But reality is closer to the opposite. Larger claimed exemptions mean more money is being spent in the state. The sales tax break extends to electrical equipment, cooling systems, and construction materials. Many of these things are either sourced from within the state or complementary with employment there.
A DeWine spokesperson replied to the article, noting that $1.5 billion in foregone revenue had attracted an estimated $27.2 billion in capital investment in 2025. Nevertheless, politicians and advocacy groups dogpiled on the exemption after the story broke. Senator Smith called it “the worst tax break in Ohio’s history.” The left-wing think tank Policy Matters Ohio called for its repeal. The Washington Post syndicated the Signal Ohio piece.
And a week later, DeWine signed the executive order pausing applications for the exemption.
For more than a decade, Ohio has been trying to reinvent itself by finding a place for itself in the industries shaping the future. To understand why the debate over data centers has become so consequential, it helps to understand how Ohio arrived here in the first place.
Recessions were supposed to birth rebounds, but by 2011, the promised recovery hadn’t fully arrived in Ohio. And this mirrored a deeper pattern in the state’s economic history.
Multiple waves of declining manufacturing employment — one in the 1980’s, another in the 2000’s — had diminished the prospects of Ohioans and sent many of them off in pursuit of more prosperous places.
The Cleveland Federal Reserve found in 1988 that the first of these waves hadn’t been driven by sudden upticks in plant closures. They had remained fairly steady, even during recessions. The problem was that the state had failed to replace those jobs at the rate it once could.
The story of Ohio’s economic decline was about growth, or really the lack of it. Now, just a couple years out from a recession that had most decidedly spurred job losses, the need for growth was more urgent than ever.
The state did have certain advantages — workers and firms with manufacturing expertise, affordable land, and abundant energy resources thanks to the region’s natural shale formations.
Governor John Kasich created a new economic development nonprofit, JobsOhio, to serve as a liaison between companies seeking to invest in the state and various stakeholders in government. He tapped Mark Kvamme, a former Sequoia Capital partner and pre-IPO Apple programmer, to lead the organization.
Kvamme’s venture capital background had primed him to believe Ohio could enter a self-reinforcing cycle of prosperity, where a few initial successes would attract capital, which would in turn fuel further success.
Kvamme identified cloud computing as one of the defining technological themes of the decade.
“The invention of cloud computing allows any engineer with an internet connection to establish a massively scalable, extremely capital-efficient server for their application,” he explained in a 2014 Medium post, “Cloud computing allows a software engineer to rent all this capability as a service from anywhere in the world.”
If the world was about to become less dependent on the traditional tech hubs for computing infrastructure, that would present an opportunity for new geographical entrants to the tech industry. Why not Ohio?
But seizing this opportunity required policy changes.
Kvamme made an unsuccessful play to have an Apple data center placed in Ohio and learned that the company had decided against the state because competing jurisdictions offered sales tax exemptions on data center equipment. The obvious course of action for the state was to create such an exemption, so it did in 2013.
The next year, Amazon committed to build a $1.1 billion dollar data center in the state. Meta (then Facebook) followed in 2017, as did Google in 2019.
Not bad for “the worst tax break in Ohio’s history.”
When Intel selected New Albany, Ohio, as the site of a new $28 billion facility in 2022, then-CEO Pat Gelsinger cited the presence of other tech giants as one reason New Albany was a natural fit for what the company expected would become “the largest silicon manufacturing location on the planet.”
The facility was projected to create 3,000 jobs directly, 20,000 indirectly, employ 7,000 workers during its construction, and contribute $2.8 billion to the state’s annual GDP.
“We helped to establish the Silicon Valley,” Gelsinger told Time. “Now we’re going to do the Silicon Heartland.”
Like Kvamme, the leadership of New Albany thinks of economic development in terms of ecosystems, or “clusters.” The city uses this term explicitly in its official economic development plan. In practice, it just means using the city’s inroads to existing industries to target complementary industries.
For New Albany — and Ohio in general —data centers have been a foundational part of this strategy. Their energy needs drove upgrades to the area’s electrical infrastructure. Their presence put Ohio on the map as a real player in the tech industry. They informed Intel’s decision to build there.
An economic hub is the product of embodied network effects. When capital, firms, and talent concentrate in a place, the result is worth more than the sum of these parts. Taking a single business or industry in a vacuum will yield reductive judgements about its value.
Today, as Ohio and others states in the region weigh tax break repeals for data centers and even total moratoria, they would do well to take a more holistic view of their competitive advantages. The Buckeye State has earned a hard-won second chance at economic greatness. It may not get a third.
