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Government The Almighty Buck

NSA Data Center the Focus of Tax Controversy 120

Posted by Unknown Lamer
from the silly-mormons-taxes-are-for-little-people dept.
Nerval's Lobster writes "Location is everything when choosing the site of a data center. Firms such as Microsoft and Google and Facebook spend a lot of time looking into the costs of land, power, regulation and taxes before placing their respective data centers in a particular place. Sometimes, that local tax bill comes into play in a big way. Just ask the National Security Agency which learned it faces a multimillion-dollar annual state tax on the power consumed by its new data center in Camp Williams, south of Salt Lake City. The Salt Lake Tribune obtained a series of email exchanges between the feds and the state, with the NSA protesting a $2.4 million tax on its annual power expenditure, pegged at about $40 million. Harvey Davis, director of installations and logistics for the NSA, sent a letter (subsequently quoted by the newspaper) to state officials that made the logistics argument: 'Long-term stability in the utility rates was a major factor in Utah being selected as our site for our $1.5bn construction at Camp Williams. HP325 [the new law] runs counter to what we expected.'" This would be the data center William Binney et al claim is logging almost all domestic communication.
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NSA Data Center the Focus of Tax Controversy

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  • by mythosaz (572040) on Monday May 20, 2013 @07:03PM (#43777299)

    So, the government is going to have to write the government a check?

    Yikes.

    • Government does this crap to private businesses all the time. I love the turnabout.

      Detroit approved three casinos, giving them a contract which included tax rates, then jacked the taxes up a few years anyway. Government doesn't have to work hard to make unethical operations like casinos (and those granted legal monopoly status at that) look like abused victims.

    • by whoever57 (658626)

      So, the government is going to have to write the government a check?

      Federal government is going to have to write the state government a check.

      • by adamchou (993073) on Monday May 20, 2013 @07:19PM (#43777387)
        Actually, that's slightly incorrect. After reading through the articles a bit more, Utah specifically said they can't tax the federal government. So what they're doing is taxing the power company the additional 6% so that the power company can pass on the additional costs to the NSA, effectively taxing the NSA an additional 6%.
        • by icebike (68054)

          Actually, that's slightly incorrect. After reading through the articles a bit more, Utah specifically said they can't tax the federal government. So what they're doing is taxing the power company the additional 6% so that the power company can pass on the additional costs to the NSA, effectively taxing the NSA an additional 6%.

          Which is sort of odd, because the State I am in does not make me pay sales tax (or any other kind of tax) when I sell to the Federal Government. So why is this power company collecting tax on the sales to the Feds?

          The power company must be buying its power from somewhere else, rather than generating it itself.
          If that is the case, then they have to pay whatever taxes they would normally pay, just like I have to pay sales tax on the box I buy to ship stuff to the government.

          • by adamchou (993073) on Monday May 20, 2013 @07:39PM (#43777497)
            Which is exactly the point. They can't tax the federal government. So they decided to create a law that allows for a loophole that taxes the power company and the law also allows the power company to pass the additional costs on to the federal government

            "We don’t tax the federal government," Mayfield explained to a Utah Senate committee March 7. "So what this bill does is tax Rocky Mountain Power and then gives them the ability to pass that on as an increase in their energy bills. So we collect an equivalent of what would have been a tax on the federal government."

            • by Jah-Wren Ryel (80510) on Monday May 20, 2013 @09:20PM (#43777981)

              They can't tax the federal government. So they decided to create a law that allows for a loophole that taxes the power company and the law also allows the power company to pass the additional costs on to the federal government

              I am sooooo OK with this. Seems like just deserts for all the times the fed has collected taxes and then held those funds hostage in order to force the states to pass laws like speed limits.

              • I get your drift and have to laugh myself. It does seem like just deserts.

                At the same time, one might ask why the Federal Government thinks itself immune to all charges and believes that it has final authority over all in these situations? And if that were true, do the states also have final authority over counties and the people in monetary and legal matters as well? In the end, doesn't that kind of thinking make the people lowest on the totem pole and little more than slaves who serve the will and t

            • Which is exactly the point. They can't tax the federal government. So they decided to create a law that allows for a loophole that taxes the power company and the law also allows the power company to pass the additional costs on to the federal government.

              Well, you've got to hand it to the Mormons; they're clever in their business dealings. Frankly I'm surprised that the NSA guys didn't see this one coming.

              • by drkim (1559875)

                Frankly I'm surprised that the NSA guys didn't see this one coming.

                The NSA only reads e-mails you DON'T send to them.

            • by tgd (2822)

              Which is exactly the point. They can't tax the federal government. So they decided to create a law that allows for a loophole that taxes the power company and the law also allows the power company to pass the additional costs on to the federal government

              "We don’t tax the federal government," Mayfield explained to a Utah Senate committee March 7. "So what this bill does is tax Rocky Mountain Power and then gives them the ability to pass that on as an increase in their energy bills. So we collect an equivalent of what would have been a tax on the federal government."

              As long as the state makes it a 6% tax on everyone, I'm okay with that. Then the voters in the state can decide if they like the tax.

              If its not being applied equally, I'd suggest the federal government apply a 6% increase in income tax rates to the people of Utah and see what the voters think of that.

    • So, the government is going to have to write the government a check?

      The US Government is going to have to write the Utah Government a check.

      Which really isn't all that unusual - the Feds send money to the States every year. This is just the NSA whinging that they shouldn't have to follow the law.

      Which, come to think about it, also isn't really that unusual....

      • by adamchou (993073) on Monday May 20, 2013 @07:20PM (#43777397)
        No, according to the article...

        "We don’t tax the federal government," Mayfield explained to a Utah Senate committee March 7. "So what this bill does is tax Rocky Mountain Power and then gives them the ability to pass that on as an increase in their energy bills. So we collect an equivalent of what would have been a tax on the federal government."

        So the US government will be writing Rocky Mountain Power a check and Rocky Mountain Power will write a check to the Utah Government.

    • by Chrutil (732561) on Monday May 20, 2013 @07:44PM (#43777519)

      Robbing Peter to Pay Paul

      yikes! What about poor Mary? She gets nothing?

    • by luis_a_espinal (1810296) on Monday May 20, 2013 @08:43PM (#43777779) Homepage

      So, the government is going to have to write the government a check?

      Yikes.

      Why is this surprising? Government is not one, homogeneous thing. Here we have a state government indirectly trying to tax an agency of the federal government.

      Again, why is this surprising? Look at any corporation of sufficiently large size. Such a corporation would be divided into either departments or business units (each with their own specific budgets). When one renders a service to another, or when two or more need to engage into some type of cross-organizational project, they need to decide how to fund them from their budgets. And if one causes costs to run higher than a certain cap, that one unit has to compensate the others' budgets from its own.

      A more tangible scenario in IT is when IT is its own department with its own budget and its own infrastructure. Other departments deploy their systems with them with some specific SLA agreements. Such SLA agreements typically include IT to pay a penalty (from its annual budget) to the other departments whenever that department(s) experience a downtime during core hours (because those "core hours" down times cause said departments to bleed money in terms of lost transactions, idle employee/users time, etc.)

      Large organizations (public or otherwise) do not have a universal budgel like a cookie jar where everyone puts his hands on. Budgets get allocated per department or business unit, with money flowing among them when rendering a service or paying a penalty for loss of service.

      • by wagnerrp (1305589)
        This is surprising because the federal government is not supposed to be taxed. Utah has enacted a piece of discriminatory legislature that allows the selective taxation of power being supplied to government and military installations such as this NSA one.
  • Cry me a river... (Score:3, Interesting)

    by ModernGeek (601932) on Monday May 20, 2013 @07:10PM (#43777329) Homepage
    The power bill went up and they aren't happy about it. A private company would have almost no recourse in a similar situation.
    • by BitterOak (537666)

      The power bill went up and they aren't happy about it. A private company would have almost no recourse in a similar situation.

      I'm guessing by your comment that you're not an American citizen, cause if you are, YOU'LL be paying the tax bill. (Where do you think the Federal government gets its money?)

      • by Anonymous Coward

        NoStringsAttached will be paying the bill from their allocated budget, meaning they will be able to record 6% less of EVERYTHING

      • by ShanghaiBill (739463) * on Monday May 20, 2013 @07:25PM (#43777431)

        (Where do you think the Federal government gets its money?)

        They borrow it from China.

        • by Anonymous Coward

          Yeh, um, you didn't think that one through. They borrow it from future-you and your unborn children. China is merely loaning the money.

          • As the GP said, "they" borrow it [the money] from China who, as you say yourself, are "loaning it". Unborn children and the "future-you" don't exist so they cannot possibly lend you anything, however you can take things away from them before they arrive.
        • Re:Cry me a river... (Score:5, Informative)

          by Anonymous Coward on Monday May 20, 2013 @08:21PM (#43777677)

          (Where do you think the Federal government gets its money?)

          They borrow it from China.

          The US debt is about US$ 16.7T right now: http://www.treasurydirect.gov/NP/debt/current

          China owns about $1.25T of that: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

          That's about 7.5%. The next largest foreign owner is Japan, which owns $1.1T (6.6%).

          The largest single holder is the US Social Security Trust Fund, with the Fed also owning about $2T currently thanks to their quantitative easing activities.

          It's become of a bit of an urban legend: yes, China holds a good chunk, but not as much as people think.

        • They borrow it from China.

          And turn around and send foreign aid money to .... don't get ahead of me on this .... China.

      • by Sir_Sri (199544)

        Still different pots at different tax rates.

        You can make a serious discussion out of which income groups are hurt more or less by federal versus state expenditure in different places.

        Every major country in the world has various levels of government, even the UK which is relatively centralized still has city, county and now the national but sub national parliaments in wales and scotland.

        The feds pay the state, the state pays the county, the county pays the city. Yes, if you're a taxpayer from anywhere outsi

      • by Anonymous Coward

        NSA can't just allocate more money from the national budget or raise taxes to compensate, their budget is fixed. The added "tax" that Utah is levying is $2.4million worth of bullshit the NSA just doesn't get to do so I'm all for it.

      • by josephtd (817237)
        China
    • by cdrudge (68377)

      Sure they would. They would make large donations during the next election cycle to incumbents or other candidates that will introduce bills reversing the tax, or giving the company a grant or tax break or otherwise returning the money.

      The NSA on the other hand will just have anyone associated with the current bill thoroughly investigated for ties to terrorism, drug dealing, child pornography, and movie/tv/music/software piracy. Those that don't capitulate get an all expense paid trip to the nearest federa

    • by jasno (124830) on Monday May 20, 2013 @07:16PM (#43777361) Journal

      A *small* private company maybe. I think a company like GOOG or MSFT can make sure the appropriate wheels are greased.

    • by adamchou (993073)
      Couldn't the private company sue? WIth regards to what's going on with the NSA, this bill is being passed specifically to tax the NSA. It doesn't tax any other organization. And they waited to put this on the floor after the NSA had already begun construction. That sounds pretty unconstitutional to me.
      • WIth regards to what's going on with the NSA, this bill is being passed specifically to tax the NSA. It doesn't tax any other organization. And they waited to put this on the floor after the NSA had already begun construction. That sounds pretty unconstitutional to me.

        I take it you didn't actually read the text of the bill, then?

        The bill pretty clearly includes any military installations in Utah, including Utah National Guard.

        And what it seems to do is establish an equivalent of the pre-existing munici

        • Re:Cry me a river... (Score:5, Informative)

          by adamchou (993073) on Monday May 20, 2013 @07:37PM (#43777487)
          I think you misunderstand what the bill is trying to say. The bill is allowing the Utah government to levy a tax on any organization that rents out military property from organizations like Utah National Guard or DoD. Previously, the state of Utah would tax levy taxes against private corporations just fine. However, the NSA is a federal entity so it can't tax the NSA. What this bill does is allow the the state of Utah to tax Rocky Mountain Power and allow Rocky Mountain Power to pass on the additional costs to the NSA. Read this article [sltrib.com] for a more layman explanation of what the bill says. And to drive the point home, they specifically said this during the motion for the bill...

          "We don’t tax the federal government," Mayfield explained to a Utah Senate committee March 7. "So what this bill does is tax Rocky Mountain Power and then gives them the ability to pass that on as an increase in their energy bills. So we collect an equivalent of what would have been a tax on the federal government."

        • by mjwalshe (1680392)
          given there are cuts in the military budget coming sounds like a good way to lose all the pork that comes with having bases and federal installations plus losing all that local income tax the people working there pay.
    • by Aryden (1872756)
      A private company can petition the local government just as easily as the Federal government can.
    • by fuzzyfuzzyfungus (1223518) on Monday May 20, 2013 @07:35PM (#43777485) Journal

      The power bill went up and they aren't happy about it. A private company would have almost no recourse in a similar situation.

      A private company operating an enterprise of equivalent size might actually have made a few little 'community investments', possibly scored some sweet 'development incentives', maybe even a 'public/private partnership' to get some of the infrastructure built for them...

      Sucks for their smaller competitors; but private enterprises shake down state and local governments all the time. If anything, this particular situation is probably coming up because the location of the NSA datacenter was decided by jockying at the federal level(rather than by the NSA shopping it around and having states beg for it), so once the location was fixed, the state has a strong incentive to soak them just hard enough that they don't actually pack up and leave.

    • Anyone calculate how many computers this much of a power bill translates into?
      • Re: (Score:2, Interesting)

        40 million power bill.

        The power bill on the Titan is 9 million.

        So about 4 computers the size of the Titan.

        I doubt if that's enough to capture the whole internet.

        • A substantial solar array would allow most of the electricity they need for their purposes to come from that, especially if they fed into the grid during the day and only took out during the night. Then you've got to allow for all the alien power sources that the NSA is bound to have got access to at Area 51; but all credit to them: if they hadn't whinged, we might have had additional evidence of those aliens' existence as a result. They are making sure they are covering themselves. ;)
    • by Nyder (754090)

      The power bill went up and they aren't happy about it. A private company would have almost no recourse in a similar situation.

      When I don't pay my power bill, they shut my power off. They don't call me, they leave a bill on my door, and they sure as fuck won't work with me.

      NSA has it lucky, so they can fuck off. Turn off their power and see how long they refuse paying you.

      • by Shavano (2541114)
        NSA builds coal-fired generator on site and arranges to have coal brought in by rail (the line is aleady there) from Colorado, where there's more than plenty coal. NSA tells Utah to fuck off. Problem solved.
        • by drkim (1559875)

          NSA builds coal-fired generator on site and arranges to have coal brought in by rail...

          Oh please - this is NSA. The scenario will probably go something more like this:

          [RING]
          NSA: Hello Governor Herbert?
          Herbert: Yes?
          NSA: This is the NSA. We were just wondering if your lovely wife Jeanette, or children Shannon, Heather, Bradley, Kimberli, Daniel and Nathan knew about the passionate email you sent to your ex-girlfriend Suzanne in December 14th, 2011.
          Herbert: Whaaaaa..?
          NSA: ...Or about the nude pictures you sent to the woman 'Jenni' you met online in February of this year?
          Herbert: But, I never...
          N

  • by IonOtter (629215) on Monday May 20, 2013 @07:23PM (#43777419) Homepage

    Wow!

    Those sure are some really useful and interesting email addresses and phone numbers!

    Thanks, Salt Lake Tribune!

  • Let the state tax the hell out of the Federal government. Chalk up the NSA's overhead as an unfunded mandate. Oh the irony.

    • Utah is a welfare state! They already get too much money from the federal government! They now want to take more of our money? WTF?

      We should stop subsidizing Utah... and all the other loser states.

      • It is so ironic that the Red States are also the welfare states.

        I mean if they were serious about their political views they should refuse all Federal aid and assorted earmarks.

        • I would gladly refuse all Federal Dollars in my State, as soon as they turn over title of all the land in the State they own to the State Government.

          Feds own 60% of the land inside my State borders. Much of that Federal "welfare" is just money the Feds are spending maintaining and operating on THEIR land.

          Consider the money the Feds pay my State as Rent for operating Wilderness Areas, National Forests, National Research Laboratories and Military Bases for them.

          • I doubt your state would do well without the federal help. The "rent" we pay for "your" land doesn't include paying people working in your state to run those military bases, research labs and parks. You likely would have next to nothing of an economy without the money coming in to pay for gainful employment.

            In addition, national forests belong to the nation not to your state and a majority decided they were too important to leave to the locals who'd probably degrade their own source of tourism over time.

  • So the NSA had no clue what was going on in tax law? They are kind of the agency that is supposed to know what is going on, were they too busy reading everyone's Facebook pages?

    Or everyone should be exempt from a law because they didn't expect it and didn't plan for it (can you say Obamacare?)?

    Or the NSA can't imagine who is really going to end up paying this tax bill?

    • This is where organisations should be signing agreements with local governments and utilities ensuring that they have a guaranteed rate, with a maximum yearly price adjustment, for a given period of time. If the local government reneges on the agreement, then there should be a penalty in the contract, which was signed.

      • by Shavano (2541114)
        Apparently, the NSA didn't figure the Utah State government for such a bunch of chiselers. They still have a lawsuit ahead of them, in which the plaintiff and the judges will be different branches of the Federal government. It doesn't take a rocket scientist to see which way that will turn out. If they should lose, it would pave the way for all kinds (literally ALL kinds) of indirect taxes directed at the federal government by states, counties, cities and rural fire protection districts.
    • by rHBa (976986)
      They'll probably outsource it all to the UK like the rest of ECHELON. I mean Google doesn't pay f#ck all tax here so why should the the rest of the USA
    • Allow me: the economic depression, coupled with state / federal governments having grown far too large for the country / tax base to support them, are having to resort to cannibalism to keep themselves going. The state government doesn't want to starve anymore than the federal government...and probably reasons that it's better to eat them first, than be eaten later.

  • Watch the NSA now influence the beltway for a pseudo-tax on Utah that happens to recoup the cost of the power. There is no point in taxing the federal government when you operate inside that government.
  • wtf (Score:4, Insightful)

    by Charliemopps (1157495) on Monday May 20, 2013 @10:07PM (#43778205)

    It's a sad that I know for a fact there are people in that facility watching this very thread right now and I can't say what I really think about it. That's where we are today. It's not going to get better, it's going to get worse. We can't even appeal to those that are watching us to do what is right and moral, because they were chosen specifically for their psychological predilection to do what they're told. The government of this country is doomed not just because of it's direction but also because the one thing it's excelled at over the years is squashing dissent without appearing to do so. Governments in the rest of the world have to deal with revolutions every so often, but like the forest that's long overdue for a wildfire, this countries going to go up like a torch when it finally does happen.

    • It's a sad that I know for a fact there are people in that facility watching this very thread right now and I can't say what I really think about it.

      Yeah, as if they couldn't figure out what you think about it based on this sentence.

      • Yeah, as if they couldn't figure out what you think about it based on this sentence.

        Well, they failed to account for those crafty Mormons finding a way to tax them, so I'm not so sure.

    • Re: (Score:3, Interesting)

      by VortexCortex (1117377)

      I sometimes practice self censorship too. However, other times I think back to 1776, and how the founders of this great nation wouldn't stand for their unfair treatment: I'm 99% sure they started a Revolution Instead! (I wasn't there, so there's at least a 1% chance the history books are lying). Then, I make innocuous posts including words like, "Give me Liberty, or Give me Death," which showed real courage and are thought to trigger the anti-establishment or anarchy detection filters -- Purely for the

    • by DCFusor (1763438)
      Why do you think the DHS is buying bullets in the billions, litmus tests are applied to high army officials (will you shoot civilians) and so on? It's because they ARE paying attention to the near-unanimous dissent we all express online. Psychologists might call this "projection" - they know they'd be truly pissed had we screwed them the way they have us (think - the amount of money bailing out banks could have made each person in this country rich and actually have stimulated the economy) - so they assum
  • I thought that US government activities have been exempt from state taxation for quite a long time, starting with McCulloch v. Maryland way back in 1819 and affirmed and expanded down to the present day. I can see so many bases on which the NSA, for Jebus' sake, could argue that they live above mere state taxation laws. Any genuine attorneys want to comment?

    • by gl4ss (559668)

      it was explained that they instead went to tax federal business partners some extra.

      so instead of taxing the government for drinking coffee.. you make a tax law for taxing whoever brings the feds the coffee. it's loopholing of course but who can blame 'em when the government loopholes around basic human rights.

  • In unrelated news, all Utah state employee bank statements, credit reports, penis and breast enlargement related health records, online dating history and other interesting materials were found posted on 325 websites around the country, along with compromising photos of those concerned presumed to come from their personal email and facebook accounts....

  • Somehow, mysteriously, 3 months from now, we'll see a massive leak of the Utah Governor's browsing history which contains rubber fetish sites and online gambling, and we'll see the Salt Lake City mayor's private emails exposed.
  • What a great opportunity for the NSA to gain green cred by running its data center on renewable energy, as Apple is doing for at least one of its data centers.

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