Data Center Taxes, Trump Tariffs, and Shakespeare?
Pointer Sisters
Romeo and Juliet Act II Scene II
Juliet:
O, be some other name!
What’s in a name? That which we call a rose,
By any other word would smell as sweet.
Juliet’s point was simple: changing a label does not change the essence of a thing. Romeo had the wrong last name, but it didn’t matter - she loved him anyway.
In politics, however, labels are everything.
Across Virginia and Washington, we are watching a familiar debate unfold.
Policies are renamed, reframed, and rhetorically repackaged — not because their mechanics change, but because their political “scent” does.
Virginia’s growing debate over data center taxation.
Since 2012, the Commonwealth has offered a sales and use tax exemption on qualifying data center equipment. The vote on those bipartisan bills was unanimous save one abstention due to a conflict of interest.
The goal was straightforward: attract capital-intensive investment, secure long-term property tax growth, and cement Virginia’s dominance in the digital economy.
The exemption incentives have been hugely successful. Virginia now leads the world - THE WORLD - in data centers.
Goal achieved. And then some…
In fact, all of the patrons of the bills - Barbara Comstock, Mark Herring, and Ryan McDougle - also moved up in the political world. Comstock to Congress, Herring to AG (twice), and McDougle to Senate Minority Leader.
Now, some lawmakers are considering narrowing or repealing that exemption — potentially raising up to $1 billion a year for state budgetary needs.
Critics describe the exemption as a “corporate gift.” Supporters call it a competitiveness tool embedded in the tax code.
The label matters.
“Gift” implies taxpayers are writing a check to wealthy corporations.
“Exemption” suggests government is choosing not to collect certain taxes to shape economic behavior.
But here is where Shakespeare intrudes: the name does not change the structure.
An exemption is not the same as a direct subsidy. No check is written. No appropriation is voted out of the treasury.
Instead, the state declines to impose a tax in the first place.
Distinction is structural, not semantic.
The deeper question is about incentives not terminology.
Would the investment occur without the exemption? Would capital flow elsewhere? Would Northern Virginia’s local property tax base shrink over time?
The real scent follows the economics, not the metaphor.
The same tension plays out nationally with tariffs. When President Donald Trump imposed tariffs, he framed them as tools to protect American industry and rebalance trade.
Opponents called them what they economically are: taxes on imported goods.
A tariff sounds strategic, a tax burdensome.
But in practice, tariffs are typically paid by domestic importers and often passed along to consumers in the form of higher prices. Calling
it trade enforcement does not change the price at checkout.
Fragrance follows the flow of money.
Virginia, in particular, must view this debate in context. The Commonwealth has already felt economic headwinds from tariffs that raised input costs for manufacturers and consumers alike.
At the same time, reductions in federal employment and contracting — a major pillar of Northern Virginia’s economy — have introduced new uncertainty.
The market HATES uncertainty.
In that environment, eliminating a tax incentive that continues to attract billions in private capital is not a neutral act; it is a directional one.
Local governments in Loudoun, Prince William, and elsewhere have come to rely heavily on data center property tax revenue to fund schools, infrastructure, and public safety.
Loudoun real estates property tax rates in 2016? $1.145 per $100.
Today? 0.80
Now that the General Assembly has authorized collective bargaining for local government employees, upward pressure on local budgets — and potentially on local tax rates — is likely to grow.
Weakening a major commercial tax base at the same time could compound fiscal strain.
In both cases — Virginia data center exemptions and federal tariffs — the fight is less about economics than about narrative.
One side says government is “giving away” money. The other says
government is “defending” economic interests. Both rely on linguistic framing to mobilize voters.
A tax exemption is not identical to a cash grant. A tariff is not magically costless because it is branded as protection.
The mechanisms, incentives, and distributional effects differ.
If Virginia repeals its data center exemption, it is not clawing back a check. It is changing the investment calculus going forward.
If Washington imposes tariffs, it is not punishing a foreign treasury directly. It is altering price signals within the domestic economy.
Shakespeare’s lesson endures because it cuts both ways. Sometimes a rose really is a rose, regardless of what we call it. But sometimes a rose and a tulip are genuinely different plants, even if political rhetoric tries to blur them.
Regardless of whether one calls an exemption a gift (it’s not) or a tariff a tax (it is), the person paying the tab will decide what smells sweet and what stinks.
Romeo and Juliet chose, at the age of 13, a tragic way out.
Shakespeare’s lesson endures - when pride and faction rule, we all lose.
Wisdom, restraint, reconciliation are just other words for the sweet smell of compromise.
Two weeks to go!
oooohhh….Fire!