Amid a national backlash against data center construction, a new research paper floats paying residents a dividend from the property taxes generated by the massive new facilities.
The paper from the nonprofit think tank Bitcoin Policy Institute said counties that attract a one-gigawatt data center — that’s large enough to power around 700,000 homes — could give each county’s household up to $8,900 by allocating half of the property tax revenue collected to direct payments.
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For local governments, data centers present an opportunity to generate significant tax revenue, even if the long-term jobs gained are low compared to the billions in upfront investment from tech companies. But polling suggests nearly 7 in 10 Americans oppose a data center being built near where they live. The outpouring of opposition often revolves around resources like water or changes to land use and the local environment, but general anxiety around artificial intelligence also plays a role.
READ MORE: The big reason small cities want data centers. Hint: It’s not permanent jobs
If residents receive a direct payment because of data center growth, the authors say it could change the tide of public opinion.
“Data center dividends have the potential to reshape the contours of this debate by converting a facility residents tolerate into an economic asset they benefit from on an annual basis,” Sam Lyman, head of research for the Bitcoin Policy Institute, wrote in the paper’s conclusion.
Is there precedent for this?
The concept of using tax revenue from a specific industry to make direct payments to individuals is not new. The clearest example, which the Bitcoin Policy Institute cites, comes from Alaska.
In 1976, Alaska voters amended the state constitution to divert at least 25% of the state’s lease payments and revenues from the oil industry into a newly created Alaska Permanent Fund. The money was invested across the stock and bond markets and real estate. Starting in 1982, the state began distributing the investment gains to residents.
In 2025, the fund distributed a $1,000 dividend to each person who applied and met residency requirements. The average household collects $3,900.
The Bitcoin Policy Institute proposal is more vague in terms of the mechanism. An investment account was not the only potential model. Instead, the paper also examines more direct ways that excess tax revenue could flow to communities.
Lyman suggests that “dividends offered as a check or direct deposit to households because it is the simplest form to understand.” But he said the money could be used to discount property taxes, utility bills, or placed in an investment account.
What are the complications?
Although Lyman points to examples, most notably Loudoun County, Virginia, where data center tax revenue helped the local government reduce property tax rates, the data center dividend currently exists only on paper.
For it to work, counties will need consistent tax revenue. However, counties often attract data centers by offering tax abatements.
READ MORE: Inside the new battleground in the clash over data centers: Tax breaks
In total, 38 states have some form of tax break or incentive for data center development, according to the National Conference of State Legislatures. Most of these revolve around sales taxes, and the foregone revenue can add up in the billions. It’s unclear exactly how many cities and counties across the country are offering property tax breaks to data centers.
In De Soto, Kansas, Mayor Rick Walker told Straight Arrow earlier this year that his city is offering a data center 10 years of property tax abatements, but he expects the city to earn $2 million a year once that decade is up.
To help solve for unpredictable revenue streams, Lyman said, “a stabilization fund is essential to making a dividend viable over the long term.”
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