New Jersey has a new plan to become the U.S. hub for AI innovation. The state’s governor signed legislation Thursday that will offer up to $500 million in tax credits for AI companies to locate in the state.
“We want New Jerseyans to be at the forefront of the AI revolution and, in the process, build a more prosperous world,” New Jersey Gov. Phil Murphy, a Democrat, said in a statement. “In doing so, we will make New Jersey the home of generative AI R&D.”
AI companies and AI-powered data centers operating at scale in New Jersey may qualify for the tax credits, which divert unspent funds from two other state tax credit programs for job creation and real estate development enacted in response to the Covid-19 pandemic.
Critics of the plan fear it could be a win for profitable AI companies but a loss for the state. Data centers typically require few employees, and tax incentives in general, including those for tech companies, can They are more expensive than what they return.In a analysis Regarding the bill, the New Jersey Office of Legislative Services, a nonpartisan agency of the state legislature, notes that it “cannot determine whether the bill will have a net positive or negative fiscal impact” on the state.
The tax credits follow Murphy’s vision for an “AI Moonshot” for New Jersey, announced earlier this year. Murphy has saying His intention was for the state’s actions to “establish New Jersey as the home base for AI-powered innovators.”
CoreWeave, a New Jersey-based AI cloud provider, recently… raised $1.1 billion and is valued at $19 billion. And the state could multiply its market by capitalizing on the growing demand for data centers in the New York area: Vacancies for leased locations fell from 9.7 percent to 6.5 percent from the beginning of 2023 to the second half of the year, according to a report by New York University. report from commercial real estate firm CBRE. The report also noted that an artificial intelligence company has previously leased space in East Windsor, a New Jersey town between New York and Philadelphia.
And AI companies are driving An increase in venture capital fundingThese highly profitable companies need data centers to do business and will put them somewhere, and they won’t need incentives to do so. “This is a very healthy, growing industry that doesn’t need any kind of government support to do business,” says Kasia Tarczynska, a senior research analyst at Good Jobs First, a U.S. national policy resource center that promotes corporate and government responsibility in economic development.
Data centers and companies working in the field of artificial intelligence are often eligible for general corporate tax incentives in the United States. But those data center tax credits “are not particularly strategic,” says Tim Sullivan, executive director of the New Jersey Economic Development Authority.
New Jersey’s plan is different from other states, he argues, because companies that benefit from the tax credit will have to set aside some computing power at discounted rates or provide AI support to smaller companies or universities. And while property in New Jersey isn’t cheap (it has the highest corporate tax rate In the US, proximity to large populations is invaluable for data centers. Opening sites closer to businesses helps reduce latency.
