A Cato Institute analyst is advocating for Congress to let the semiconductor manufacturing investment tax credit from the CHIPS and Science Act expire at the end of the year.
Adam Michel, director of tax policy studies at the Cato Institute, argues that the CHIPS Act tax credit, designed to subsidize domestic semiconductor manufacturing, functions as a 'backdoor AI subsidy' because semiconductors are central components of artificial intelligence data centers. This call comes amid increasing voter backlash against data centers and coincides with some members of Congress proposing a moratorium on data center build-outs. Michel acknowledges data centers are beneficial for America but believes the government should not be actively subsidizing their inputs, stating the subsidy is costing taxpayers billions of dollars.
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