> But I don't see what other options are available for states to compete with each other if not through tax breaks.

They should compete based on actual policy including tax policy. "Tax breaks" for specific projects are just unfair and a quick race to the bottom. Instead, areas should be required to treat all entities equally. Even tax breaks for specific industries like tv/film production are unfair but at least industry wide tax breaks treat individual entities more fairly.

If a state's taxes are too high to attract investment, then they should have to lower taxes for everyone (of the same type).

> exempt from state and local sales and use taxes on its data center equipment for the next 20 years

That said, the real issue IMO is that "use taxes" are just absurd to start with. Why should a random city/town be taxing products neither made nor sold in their jurisdiction. If anything, the sale of the datacenter product/services should be taxed but the external inputs "imported" from other states or countries is crazy to tax.

Again, I will die on the hill that a land value tax makes this all very simple. A LVT is the perfect strategy for extracting public value from data centers since electricity & water availability is a major input to a lands value.