Ken Paxton Unveils Data Center Plan Banning Chinese Tech, Though He Voted for the Tax Break in 2013

Ken Paxton wants Texans to know he's tough on data centers now. On Monday, the state's attorney general and Republican Senate nominee released a four-point platform aimed at the industry that's reshaping his state's power grid, water supply, and property tax base, according to the Texas Tribune and multiple other outlets covering the release.

The plan has two federal pillars and two state-level ones. First: ban Chinese-linked technology from operating in US data centers and critical infrastructure, a position Paxton says aligns with Senator Tom Cotton's DATA Act, introduced January 7, 2026, according to Crypto Briefing. Second: make data center operators criminally liable if their facilities power AI chatbots that harm children. A notable shift, since platform liability today sits with software companies, not the buildings running the servers.

At the state level, Paxton wants to repeal the sales tax exemption that lets qualifying data centers skip taxes if they invest at least $200 million and create 20 jobs. He's also backing Governor Greg Abbott's August 3 directive ordering the Public Utility Commission and ERCOT to audit data centers before approving new interconnections, per klif and the Dallas Express.

The 2013 Vote Problem

As a freshman state senator in 2013, Paxton voted for House Bill 1223, the very sales tax exemption he now wants repealed. The Texas Tribune and San Antonio Current both confirm he's listed among the 23 senators who passed it. The Texas Comptroller now projects that exemption will cost the state $3.2 billion in revenue over the next two years.

That vote matters because it's central to his opponent's attack. Democrat James Talarico, an Austin state representative running against Paxton, rolled out his own "Hold Data Centers Accountable Plan" back in July — more than a month before Paxton's announcement. Talarico's plan goes further, calling for giving local officials direct approval power over data center projects.

Talarico didn't hold back on Monday. "Ken Paxton has taken nearly half a million dollars from the data center industry, voted to flood Texas with data centers by giving them billions in tax handouts, and has refused to use his power as attorney general to respond to Texans' requests to block data center development in their communities," Talarico said in a statement, as reported by the Texas Tribune and Newsweek. He called Paxton's plan "a sad attempt to reverse course."

NOTUS reported this month that Paxton's political operation has collected close to $450,000 from data-center-affiliated donors, a figure cited by the Texas Tribune and San Antonio Current. Paxton's campaign has not offered a public rebuttal to that donor total in the sources reviewed here.

There's also Hood County. Officials in that rural community southwest of Fort Worth asked Paxton's office in February whether the county could impose a moratorium on data center development, after developers proposed eight facilities spanning more than 7,600 acres there. Six months later, according to the Tribune, that opinion still hasn't been issued. An attorney general sitting on a legal opinion for half a year while his Senate campaign unfolds is a fair target, whatever the reason for the delay.

The AI-Generated Graphic Controversy

Newsweek reported that when Paxton posted his plan on X, a number of users immediately accused him of using AI to generate the accompanying graphic. Talarico's campaign seized on that, folding it into their broader "made with AI" jab. The sources reviewed don't independently confirm whether the image was AI-generated. It's a social-media reaction, not a documented fact, and readers should treat it as an unresolved claim rather than settled.

The Actual Numbers Behind the Fight

Texas has 335 existing data centers with more than 248 more in the pipeline, according to a Texas Tribune analysis. ERCOT is currently processing interconnection requests for new large loads totaling between 438,000 and 474,000 megawatts, and roughly 90% of those requests come from data centers, per Crypto Briefing. A June poll from the Texas Politics Project at the University of Texas at Austin found a majority of Texans oppose data center construction in their own communities.

Paxton's plan does track with broader industry moves. Cotton's DATA Act would let data centers build off-grid power systems exempt from federal oversight. A deregulatory approach that broadly matches President Trump's stated AI framework, which favors streamlined permitting so facilities generate their own power rather than push costs onto residential ratepayers, according to klif and the Dallas Express.

Whether the Chinese-technology ban is legally workable is a separate question. Data centers source networking gear, servers, and cooling systems through global supply chains that often include manufacturers with Chinese state ties. Auditing and replacing that hardware across existing US infrastructure would be, in Crypto Briefing's framing, "expensive and logistically complex." Paxton's proposal leaves it to Congress to define exactly which companies and products get banned. A detail not yet worked out in any of the reporting reviewed.

The unresolved question heading into November: does a candidate get credit for correcting course, or does a 2013 vote for the exemption he now wants killed undercut the sincerity of the reversal? Texas voters will decide that themselves. But the six-month-old Hood County opinion request sitting unanswered on Paxton's desk is a fact, not a talking point, and it will keep coming up until his office resolves it.