I wrote recently about Democrats’ dishonest claim that Republicans, in last year’s big budget bill, had given tens of billions of dollars in tax breaks to data centers. A reader complains:
Meta paid an effective tax rate of 3.5% in 2025 on their US income. Campaign ads are always disingenuous – we all know that.
Sadly, Ramesh’s “journalism” is equally disingenuous.
I don’t think it is at all reasonable to fault me for focusing on a specific false claim that is showing up in multiple campaign ads across the country rather than, say, every possible criticism of every company involved in data centers. But the claim this guy is making is also misleading. Its origin is in a calculation made by the Institute on Taxation and Economic Policy, a left-wing group. Adam Michel has debunked it.
The biggest “tax break” that ITEP is counting is the same one I wrote about in that column: accelerated depreciation for investment expenses. Michel explains how ITEP’s methodology works.
Imagine a company earns $10 million and spends all of it on a new piece of manufacturing equipment in 2025. . . .
Under current tax law, the firm can deduct the full $10 million in the year the investment is made. The firm’s taxable income in 2025 is zero, but it will have no additional deductions left over in future years.
ITEP, on the other hand, uses financial accounting rules to count the cost of that investment over ten years. It would show the firm paying no taxes on $9 million in accounting profits. If the firm were in its crosshairs, it might issue a press release saying that the firm had gotten a $1.9 million tax break because it had avoided the 21 percent federal tax on these profits. We could be sure that in this hypothetical situation, the press release would not mention that the firm would still owe that $1.9 million in taxes spread out over the next nine years.
Similarly, ITEP says Meta is getting $5 billion from accelerated depreciation this year. It doesn’t note that it will have to pay most of those savings back in future years. Even if you buy the argument that the tax code should follow the accounting rules — and I explained in my column why a lot of economists don’t agree — ITEP is overstating the size of the tax break that Meta and other companies are getting.
It should not be, but apparently is, necessary to add that my points do not imply that Zuckerberg is a good guy, that every provision of tax law his company uses for its benefit is wise, or even that his company shouldn’t be razed to the ground for other reasons. This specific argument about corporate taxes is wrong regardless of what conclusions one reaches about these other issues.