As artificial intelligence drives a massive expansion of data centers across the country, West Virginia is looking to turn the industry’s growth into something residents could see directly in their wallets: lower taxes.
The state plans to dedicate half of the tax revenue generated by new data center projects toward reducing and eventually eliminating its personal income tax, linking the rapidly growing AI industry with a broader push for tax relief and economic development.
Former White House economic adviser Steve Moore called the proposal one of the best economic ideas of the year, arguing West Virginia is particularly well-positioned to benefit from the data center boom.
“Boy, has this issue of these data centers become a hot potato issue or what?” Moore told The National News Desk.
Data centers have become increasingly controversial as technology companies race to build the computing infrastructure needed to power artificial intelligence. Supporters point to billions of dollars in potential investment, new jobs and growing demand for American technology, while opponents have raised concerns about electricity consumption, water use, land development and potential effects on utility costs.
Moore said those competing views are creating dramatically different reactions across the country.
“Some communities are really resenting and resisting having data centers come into their communities,” Moore said. “Others say, ‘We want them. We want the jobs. We want the economic development. We want the industrialization. We don’t want China to win the AI race.'”
West Virginia could offer several advantages for developers, Moore argued, including available land and access to abundant energy resources.
“West Virginia would be an example of a perfect state because it has a lot of land, a lot of open land,” Moore said. “It has a lot of electric power because West Virginia has a lot of coal and natural gas. And they need the jobs there.”
Major technology companies are spending heavily to expand the computing capacity required for increasingly powerful artificial intelligence models.
Moore said companies including Google, Amazon and OpenAI will likely prioritize communities that actively welcome the investment rather than attempting to overcome significant local opposition.
“The technology companies like Google and Amazon and OpenAI are going to have to go to the communities that want them,” Moore said. “Because if you try to put it in a community that does not want it, you’re going to get so much public resistance.”
Other states with large amounts of available land and energy resources could also become major beneficiaries of the trend, Moore said, pointing to Wyoming and North Dakota.
“These are sparsely populated states that have a lot of land that could have the economic development,” he said. “By the way, it will be billions of dollars into their state.”
West Virginia’s proposal attempts to connect that investment directly to its residents by using a portion of the resulting tax revenue to reduce the state’s personal income tax.
The strategy comes as states increasingly compete for data center projects and the jobs, construction activity and tax revenue that can accompany them.
But even as investment pours into AI and other sectors, Moore acknowledged many Americans remain pessimistic about the economy.
Consumer confidence fell again in August despite what Moore described as positive developments involving business investment, manufacturing and financial markets.
“It really is sort of a paradox that you have a lot of good news on the economy,” Moore said.
“We are seeing record amounts of investment coming into the country,” he added. “We’re seeing a bit of a manufacturing boom. I mentioned the AI boom and all the money that’s bringing in. Obviously, the stock market has been on a tear, and yet consumers are angry.”
Moore said continued frustration over everyday expenses is contributing to weak consumer sentiment and presenting a political challenge for President Donald Trump.
“I think Trump is going to have to do more things to persuade the Americans that he wants to do everything he can to bring down gas prices, food prices, housing prices,” Moore said.
That concern also shaped Moore’s view of the administration’s escalating trade tensions with Canada.
Moore, a longtime advocate of free trade, cautioned against imposing additional tariffs while Americans remain focused on affordability.
“I don’t think right now is a great time for new tariffs or a tariff war with Canada because, you know, when tariffs go up, that means prices go up as well,” Moore said.
He argued both the United States and Canada benefit from trade and said he would prefer the two countries lower barriers rather than continue exchanging new restrictions.
“Hopefully we’ll just turn down the temperature a little bit here because it’s become a kind of tit for tat,” Moore said.
“The problem for Canada is, you know, they can’t win a tit for tat with the United States because they have to trade with us,” he added.
Moore said he supports a “level playing field” but ultimately wants tariffs to be “as low as possible.”
“I’m going to be meeting with the president in the next couple of weeks to tell him exactly that,” Moore said.
Despite concerns about consumer sentiment and prices, Moore remains optimistic about the broader U.S. economy.
“The United States has the best economy in the world,” he said. “There’s no country in the world that wouldn’t trade their economy for what we have in the United States.”
Attention is also turning to new inflation and economic growth data that could influence the Federal Reserve’s next decision on interest rates.
Moore said the most important signal would be continued progress in bringing inflation closer to the Fed’s long-term 2% target.
“Like most Americans, I want to see that inflation number coming down,” Moore said.
He predicted inflation would come in around 3.3%, while noting that elevated oil prices continue to put upward pressure on costs.
“We want it down below 2%,” Moore said.
For West Virginia, the AI boom presents a potentially different approach to improving affordability: attracting billions of dollars in private investment and using the resulting government revenue to reduce what residents pay in taxes.
Whether that strategy ultimately allows the state to eliminate its income tax will depend on how much data center development materializes and how much revenue those projects generate. But as communities nationwide debate whether to welcome or resist the industry’s rapid expansion, West Virginia is making its position increasingly clear: it wants a piece of the AI boom — and wants taxpayers to share in the benefits.