One State Gets Tech to Pay the Bills, the Other Singles it Out with New Taxes
White’s Ferry across the Potomac was the shortest distance between Poolesville, Maryland, and Leesburg, Virginia. Now, it’s the perfect metaphor. When the ferry shut down operations in 2020, the trip from Montgomery County’s Agricultural Reserve to Loudoun County’s Data Center Alley got 40 minutes longer.[i] The physical divide now mirrors an economic chasm: on one side, Loudoun County is minting money from data centers. On the other hand, Montgomery County, Maryland, is protecting horse trails.
In Virginia, digital infrastructure pays for schools, roads, and services. In Maryland, the only thing expanding are tax rates.
Back in 2007, Loudoun County’s Department of Economic Development did something very smart and began aggressively courting data centers. They offered zoning certainty, infrastructure investment, and a stable regulatory environment.[ii]
The result? Loudoun is now home to the world’s largest concentration of data centers. The county anticipates up to $1.4 billion in annual tax revenue, primarily from personal property taxes on the equipment humming inside those concrete fortresses of the internet and real property taxes on the land beneath them.[iii]
To put it bluntly: Loudoun County, a jurisdiction with half the population of Montgomery County and roughly 7% the size of Maryland, is close to generating revenue matching the entire $1.6 billion in new taxes just passed by Maryland lawmakers.[iv]
Montgomery County has its own strategy just across the Potomac. Instead of building the infrastructure of the future, it’s enforcing 93,000 acres of protected Agricultural Reserve—one-third of the county’s land—where commercial, residential, and industrial development is functionally prohibited. Here, you can’t build a data center. But you can stable a horse. Roughly 10,000 horses now roam the county, giving residents “competitive and recreational opportunities,” according to Montgomery County literature.[v] (Not to rub salt into Maryland’s wounds, but Loudoun County has more,15,000.[vi])
Let’s run the math. A standard data center could occupy around 600,000 square feet. Depending on the FAR, you’d need one single-family 25-acre lot to build one in the Ag Reserve. You’d have to rezone or rewrite decades of policy. And good luck with that.
Instead of reaping tax revenues from servers, Maryland is hitting IT services with new taxes.
Unable to plug budget holes with economic growth, Maryland is now entering the digital economy with a 3% IT and cloud services tax. The measure is expected to raise $450 million—not by attracting new businesses but by shaking down the ones that have yet to flee.[vii]
The state’s full 2025 tax package totals $1.6 billion and includes hikes on alcohol, tobacco, DMV fees, and digital advertising. It’s being marketed as “shared sacrifice.” In reality, it’s economic cannibalism. Delegate Brian Crosby, a Democrat and vice chair of the House Economic Matters Committee, even admitted that the IT services tax drove at least one company to move to Virginia.[viii]
In his usual TED Talk cadence, Governor Wes Moore insists he wants Maryland to become “the cyber capital of the United States.” He recently allocated $1.8 million for cybersecurity training at community colleges. That’s about 0.13% of the expected new tax revenue that Maryland just implemented.[ix] So, Maryland is training kids for jobs… in Virginia.
And if you’re wondering what Maryland prioritizes, look no further than the $400 million earmarked for renovating Pimlico so the Preakness Stakes can remain in Baltimore.[x] You can’t make this up. Virginia builds tomorrow’s infrastructure; Maryland preserves the horse racing track of yesterday.
None of this is lost on Wall Street. Virginia maintains an AAA credit rating. Maryland? It was downgraded, thanks to a structural deficit and a growth strategy that amounts to taxing anything still breathing.
Credit agencies, like businesses, care less about slogans and more about spreadsheets. Virginia’s Loudoun County shows what happens when local government aligns with technological and economic trends, while Maryland shows what happens when it aligns with nostalgia.
White’s Ferry isn’t just a shuttered crossing—it’s a lesson in policy divergence. On one side: an economy optimized for the digital age. On the other hand, 25-acre home lots, tax hikes, and a declining business climate wrapped in well-meaning rhetoric.
Loudoun County is profiting from the 21st century. Maryland is taxing it until it leaves the state.
[i] https://www.loudounnow.com/news/maryland-offers-3m-to-help-resume-white-s-ferry-operations/article_484bc96e-7aea-49ac-b77f-f22f183e738d.html
[ii] https://www.loudoun.gov/ArchiveCenter/ViewFile/Item/13979
[iii] From Washington Business Journal, https://netchoice.org/jaw-dropping-numbers-loudouns-data-center-tax-revenue-could-top-real-estate-taxes-in-just-a-few-years/
[iv] https://foxbaltimore.com/news/local/maryland-state-budget-deal-includes-16-billion-in-taxes-and-billions-in-cuts
[v] https://www.montgomerycountymd.gov/agservices/ag-reserve.html;
[vi] https://www.visitloudoun.org/things-to-do/horse-country/
[vii] https://www.govtech.com/budget-finance/maryland-budget-deal-would-put-3-tax-on-data-it-services
[viii] https://marylandmatters.org/2025/03/25/vice-chair-of-house-panel-says-tech-tax-drove-decision-to-move-business-to-virginia/
[x] https://marylandmatters.org/2024/09/16/paying-for-pimlico-project-remains-a-concern/ ; https://directlinenews.substack.com/p/betting-on-the-past-the-high-cost
Direct Line News is a Maryland-based free-access publication committed to the Republican reform tradition.
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