Wyden's Data Center Tax Has No Rate, No Name and No Score
The Senate Finance Committee's file for Wyden's data center package is a discussion draft with the key numbers missing. Meta's 2% tax rate comes from a different break entirely.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, released text on Friday, Oct. 23, 2026, for a tax on data centers. The committee's own file leaves four things empty: the introduction line, the committee referral, the short title and the tax rate. The committee has published no revenue estimate either.
What Roll Call reported as a pair of bills is, for the data center half, a discussion draft with its burden-deciding number missing. The files are dated Oct. 22 and went out Oct. 23, 11 days before the midterms on Tuesday, Nov. 3. The other half, the Stability and Opportunity for Workers Act, has Senate Democratic Leader Chuck Schumer and Sens. Michael Bennet and Elizabeth Warren as co-sponsors.
A draft with blanks where the numbers go
A discussion draft is not an introduced bill. It has no bill number and no committee referral, which is what the blank lines mean. This one, reference MCG26807 PT9, adds a new Chapter 50B to the Internal Revenue Code.
The chapter holds two filled-in taxes and a stub for orbital data centers. The first is a percentage of gross receipts from data center services provided from a U.S. data center. Gross receipts are revenue before any costs come out, which matters more than it sounds. The percentage is blank. So is the percentage in the second tax, an alternative levy on hyperscale operators. The committee's technical summary says only that the rate will be determined once revenue estimates are available
. The committee has published no revenue estimate.
Coverage is broad: data storage, cloud, AI training and inference, and any facility with peak demand of 25 megawatts or more (why these sites draw so much power). Web hosting, broadband access and corporate IT-department data centers are excluded. The tax is nondeductible, so a company cannot subtract it as a business expense.
Hyperscale operators owe the greater of the ordinary tax or the alternative one, which is computed on imputed receipts: 167 percent of depreciation-based asset use plus applicable data center costs. That is a 67 percent markup on cost, which the summary describes as roughly a 40 percent profit margin. A company qualifies as hyperscale with more than $10 billion of unadjusted basis in data center equipment, or more than $1 billion in data center services expenses (the legal text says "in excess of"; the technical summary says "at least"). Small operators that pass the $32 million receipts test and do not serve hyperscale customers are exempt.
Those thresholds moved. Wyden's white paper, released Thursday, Aug. 6, 78 days before the October text, set the largest-actor tests at $25 billion of assets and $2 billion of annual payor expenses and described a low single-digit rate. The October draft cuts the thresholds by 60 percent and 50 percent and replaces the rate language with a blank. The Hoosier Enquirer's rate and base details come from the August white paper, as the outlet says. How many companies cross the lower lines, no source reviewed says.
Can it move? Wyden is in the minority, and the Hoosier Enquirer reports the draft cannot advance without Republican votes. Sen. Mike Rounds (R-S.D.), co-chair of the Senate Artificial Intelligence Caucus, said in June:
"If you start to tax it, you slow it down, and it goes elsewhere, or it does not move as fast as it will in other parts of the world. That's not good for America."
Sen. Mike Rounds, R-S.D., co-chair of the Senate Artificial Intelligence Caucus, via Roll Call
None of the reporting reviewed mentions a hearing, markup or Republican co-sponsor. Venn Strategies' Oct. 2 newsletter says Finance Chairman Mike Crapo hopes for a year-end tax bill of his own, and that lawmakers return Monday, Nov. 9, facing the defense bill and a Dec. 11 funding deadline. Roll Call calls the release an early signal of priorities if Democrats regain the Senate. That reads as a 2027 story.
Nor does the draft pay for the workers' bill. That measure offers up to two years of income support while retraining and a $250-a-week Jobseeker Allowance. Its section-by-section summary names no funding source and no data center tax, and the data center text has no trust fund, dedication or appropriation. The August release said revenue should aid workers hurt by AI adoption, yet the Washington Sun reported that Wyden's office had not decided where the money would go. The link is intent, not statute.
The draft is silent on electricity bills, too. The August release said Wyden was exploring ways to limit data centers' effect on local power supply and rates, but none of that is in this text (the reasons bills are climbing go beyond any one tax). Daybreak Wire's Oct. 13 report looked at where Trump and his own candidates split on data centers and power bills. Warren told Fortune that AI companies are forcing Americans to subsidize their data centers with your tax dollars and higher utility bills
.
Wyden's separate public-lands bill, introduced Wednesday, Sept. 30, is a different matter. Sen. Rand Paul blocked a unanimous-consent request for it that day, according to Jefferson Public Radio.
Receipts are not profit
The blank rate matters because of the base. A tax on receipts ignores whether the business made money. The Tax Foundation's Andrew Lautz, Richard DiSalvo and Garrett Watson put the problem plainly in their analysis:
"a seemingly low tax on gross receipts can in practice be a very high tax on net income."
Tax Foundation (Lautz, DiSalvo, Watson)
The arithmetic is rate divided by profit margin. Because the draft's rate is blank, the rates below are illustrations only, not anything Wyden has proposed. The figures are the add-on before any income tax already owed, and the nondeductible design means no deduction shrinks it.
| Receipts-tax rate | 5% margin | 10% margin | 15% margin | 20% margin |
|---|---|---|---|---|
| 1% | 20.0% | 10.0% | 6.7% | 5.0% |
| 2% | 40.0% | 20.0% | 13.3% | 10.0% |
| 3% | 60.0% | 30.0% | 20.0% | 15.0% |
| 4% | 80.0% | 40.0% | 26.7% | 20.0% |
Read across a row: a 3 percent charge is a 15-point bite at a 20 percent margin and a 60-point bite at 5 percent. Adam N. Michel of the Cato Institute used a Tax Foundation model and a 3 percent rate of his own choosing, then added an 80 percent baseline rate in Santa Clara County, Calif. His conclusion: In Santa Clara County, that low single-digit tax would push the total effective tax rate to 100 percent.
The 3 percent is Michel's assumption, not Wyden's.
Critics go further. James Erwin of Americans for Tax Reform told Fox News in August: This tax will be paid by anyone who uses the internet.
The Brookings Institution's Darrell West called it a good first step, and the Washington Examiner paraphrases him as arguing it would not hinder data center construction. Each side may be right about something. But who ultimately bears the tax, whether operators, customers or shareholders, is not modelled in any source reviewed.
The draft also strips tax breaks. Section 3 ends bonus depreciation, which lets a company deduct equipment costs up front, for large data center assets placed in service after enactment. Section 4 keeps them out of Opportunity Zones, the tax-advantaged areas meant to draw investment. Section 5 removes certain rents from private REITs' qualifying income. Section 6 bars data center equipment from counting as supplies for the research credit. Each provision applies only after enactment.
None of it is scored. The Joint Committee on Taxation, Congress's official revenue estimator, told Warren in an Oct. 28, 2025 letter that 100-percent bonus depreciation would cost $362.7 billion from 2025 through 2034, but for all property in the economy, with no data center line. The Tax Foundation scored Sen. Mark Warner's narrower disclosure bill at $29.9 billion over 2027 to 2036, a different bill. On spending, the white paper says hyperscalers are set to spend roughly $700 billion this year, while the Tax Foundation cites Goldman Sachs at $581 billion. Two sources, no common base.
The 2% belongs to a different break
Fortune's reading of Meta's filings quotes the company: Our effective tax rate for the nine months ended September 30, 2026 was 2%
, against a 21 percent statutory rate. The cause was Treasury Notice 2026-7, issued Wednesday, Feb. 18, which gave relief from the corporate alternative minimum tax tied to capitalized research costs. Meta booked an $8.03 billion benefit in the first quarter.
Without that benefit, Fortune calculates, the provision would have been roughly 17 percent of pretax income. Meta's third-quarter rate, untouched by the benefit, was 24 percent, and the company expects 15 to 17 percent for the fourth quarter.
The credit is a separate fight. Wyden and six Democratic colleagues wrote to Mark Zuckerberg, a letter Fortune dates Oct. 13 and the committee posted Oct. 14, asking for an answer by Halloween, Saturday, Oct. 31. They say Meta's disclosures show the credit cut its federal income tax by $6.6 billion from 2023 through 2025, and ask how much went to chips and computing equipment. The letter says Subsidizing your A.I. data center build is not close to meeting this standard.
A Meta spokesperson told Fortune that AI-optimized data centers are inherently new and require extensive testing and experimentation that cannot be simulated in order to get the design and build right.
Set that beside the draft. Nothing in the provisions the committee lists reaches Treasury Notice 2026-7. Section 6 does touch the research credit, but only going forward, and it includes a clause saying nothing should be inferred about earlier years. So Meta's answer, due Oct. 31, concerns 2023 through 2025, precisely the years the draft's no-inference clause leaves alone.
