Broken clocks and corporate tax incentives

A recent episode of The Tucker Carlson Show dove deep into one of the hottest topics of the moment: the explosive growth of AI data centers. The conversation unpacked the massive electricity demands these facilities require, the national security implications of the race for AI dominance, and the rising wave of NIMBY-style opposition bubbling up in communities from rural Utah to small towns across the country. 

These issues are hard to escape lately. AI infrastructure has gone viral, sparking a mix of legitimate worries and tinfoil-hat material about power grids, water usage, and environmental strain. It’s a genuinely fascinating moment with a high-stakes debate playing out in real time about how these enormous investments will reshape our energy landscape, local economies, communities, and broader society. Yet amid all the gigawatts and grand theories about surveillance states or dystopian futures, what stood out most to me about this conversation wasn’t the flashy technological hype or gigawatt demands. It was the relatively mundane, but frank, exchange on corporate tax incentives. 

Carlson asks why taxpayers should foot any part of the bill for these projects when the primary beneficiaries are some of the world’s wealthiest companies. The back-and-forth with Kevin O’Leary, a notable investor and media personality who is pushing a massive data center development, highlighted a tension that feels both timeless and newly urgent.

Regardless of your view on Tucker Carlson or AI in general, this a great question!

CARLSON: But why are you getting tax breaks is my question.

O’LEARY: Everybody, you go back and you say, “What incentives can you give us to invest $15 billion in the first 1.5 gigs?” That’s what it takes. I have to go raise $15 billion. That’s just the first —

CARLSON: But anyone who starts a business, why should taxpayers have to pony up for that?

O’LEARY: They don’t.

CARLSON: Of course they do. If you’re getting a tax break and they’re not, they’re making up the difference. There’s a state budget.

This snippet captures a frustration many feel as they watch headlines about billion-dollar AI projects seeking special treatment. The cultural backlash against data centers often mixes environmental and quality-of-life concerns with a sense of unfairness that ordinary people are being asked to subsidize giants who already dominate the economy. 

In North Carolina, for instance, Democratic Gov. Josh Stein has publicly questioned the logic: “Do we really want to subsidize data centers’ consumption of energy and electricity when they make everyone else’s power bills go up? It doesn’t make much sense to me.”

Republican leaders have echoed similar skepticism.

NC House Speaker Destin Hall, R-Caldwell, remarked, “Big companies like that, they ought to pay the same taxes [as] any other business that’s beside of them.”

Senate Leader Phil Berger, R-Rockingham, added that data centers should pay sales tax on their electricity bills just like regular consumers and businesses. 

Lawmakers from both parties have introduced or supported measures to roll back or eliminate these targeted incentives, reflecting a growing bipartisan admission that the old playbook for attracting businesses may no longer fit today’s political reality — at least with AI.

But the Carlson/O’Leary exchange demonstrates why this logic should apply more broadly than to just the “current thing”:

CARLSON: Why would the taxpayers have to? I mean, in other words, if you want to start a business, but why am I, as a taxpayer, forced to pay for your business? I don’t get it.

O’LEARY: Well, let’s forget about data centers. Let’s go any manufacturing. Let’s say you’re going to build an aluminum sheet manufacturing facility. You go to the government there and say, “Look, this is going to be a huge cap-ex expenditure. I’m going to hire 2,000 people. I’m going to build a community center. I’m going to pay a lot of tax on the profits in your state when I sell the aluminum. And I’m going to hire all these people who will also pay tax. And we will build a school because our workers need a school.” And what can you give me to incentivize me versus the state right beside you, which is willing to give me an incentive package?

CARLSON: No, no, I understand that you’re gaming a system in a place you didn’t come up with, but I’m just trying to understand.

[…]

O’LEARY: Tucker, welcome to America, buddy. This is how it’s gone on for 200 years.

CARLSON: Okay, well, I don’t know. Lots of bad things go on for a while. I’m just, but I think at some point it’s worth assessing like, why are we doing this?

Exactly!

O’Leary is right that executives have a fiduciary duty to pursue every legal advantage, including incentives offered in competitive interstate bidding wars. Passing on free money to boost returns for investors would be negligent in a system where governments routinely dangle such packages in a battle for jobs and headlines. States and localities have competed this way for decades, promising jobs, infrastructure, and long-term revenue in exchange for upfront breaks.

Yet Carlson’s skepticism cuts deeper. Just because the practice is so entrenched, that doesn’t make it wise or sustainable. Why should taxpayers routinely subsidize private ventures, whether AI data centers, factories, or sports stadiums? While these deals often amplify politicians’ ribbon-cutting moments, they merely shift burdens elsewhere through higher effective rates on everyone else.

Fiscal analyst Joseph Harris of the John Locke Foundation sums it up well: “Targeted tax exemptions, such as those for data centers, distort resource allocation and ultimately require higher rates for everyone else. A lower, broad-based tax rate is a more efficient and sustainable alternative.”

In North Carolina, programs like JDIG (Job Development Investment Grant), the OneNC Fund, and Public Infrastructure Funds exist to lure big projects. They can deliver wins in targeted cases, but they also invite cronyism and deserve rigorous, ongoing scrutiny rather than reflexive approval. Performance metrics help, yet honest evaluations of net taxpayer return — accounting for opportunity costs, distorted markets, and long-term fiscal impacts — remain far more rare than the flashy press releases announcing new facilities.

The AI boom provides a perfect catalyst for this broader reassessment. As data centers multiply and the debate about their unique demands on power and other resources develops, communities are rightly pausing to ask whether such incentives make sense. The same logic should extend across the incentive landscape.

In an era of trillion-dollar tech valuations and urgent energy challenges, insisting on transparent, broad-based rules instead of selective favors is hardly extreme or unreasonable. It’s overdue common sense that has merely found resonance within the raging cultural AI debate. Policy-makers should take heed.

“Broken clocks and corporate tax incentives” was originally published on www.carolinajournal.com.