Democratic Senator Ron Wyden, the top Democrat on the Senate Finance Committee, has proposed increasing taxes on data centres and cloud computing, prompting sharp criticism from opponents who warn the added costs could ultimately be passed on to nearly all American consumers. The plan, outlined in a white paper released last week, would target tax incentives that currently benefit the rapidly expanding data centre and cloud computing industries.

Critics argue that because data centres and cloud services underpin everything from streaming and online shopping to banking and workplace software, higher taxes on these operations would likely be absorbed by businesses and then passed down to ordinary consumers through higher prices. The proposal comes amid a broader debate over the explosive growth of data centres to support artificial intelligence, with some commentators, including investor Kevin O'Leary, arguing the US needs to accelerate rather than hinder such development to keep pace with China in the AI race.