What’s the Matter with Delaware?: How the First State Has Favored the Rich, Powerful, and Criminal—and How It Costs Us All

Delaware is the legal home to over a million companies, more registered businesses than residents. This book reveals how it has enabled international crime, sheltered tax dodgers, and diverted hard-earned dollars from the rest of us. It also shows how it has provided safe haven to money launderers, kleptocratic foreign rulers, and human traffickers, and facilitated tax dodging and money laundering by multinational companies and international gangsters. Delaware derives enormous political clout from the Franchise, effectively writing the corporate code for the entire country.

Format: Paperback / softback
Length: 296 pages
Publication date: 16 January 2024
Publisher: Princeton University Press

Delaware, known as the "First State," has gained a reputation for enabling international crime, sheltering tax dodgers, and diverting hard-earned dollars from the rest of the United States. With over a million registered businesses, it boasts more registered companies than residents. This phenomenon has led to questions about why virtually all of the biggest corporations in the US choose to register in Delaware.

One reason for this is the state's business-friendly corporate veneer. Delaware has a well-developed legal system and a reputation for being favorable to businesses. The state's laws are relatively lax, making it easier for companies to set up and operate. Additionally, Delaware has a skilled workforce and a convenient location, with access to major transportation hubs and a strong financial industry.

Another factor contributing to Delaware's popularity is the state's tax policies. Delaware has a flat tax rate of 0.07%, which is among the lowest in the US. This low tax rate attracts both large and small businesses, as it reduces their overall tax burden. Additionally, Delaware offers several tax incentives, such as tax credits for research and development, which further encourage businesses to set up in the state.

Wealthy individuals also form multiple layers of private companies in Delaware for tax purposes. By creating these private companies, individuals can reduce their tax liability and avoid paying taxes on certain types of income. This practice is known as tax avoidance or tax evasion, and it has been criticized by many for its negative impact on the economy.

Delaware's business-formation industry, known as the Franchise, is a significant contributor to the state's economy. Revenues from this industry account for two-fifths of the state's budget, and have helped to keep the tax burden on its residents among the lowest in the US. However, this industry has also been criticized for its lack of transparency and accountability.

Delaware's outsized influence on corporate America has led to concerns about the state's role in writing the corporate code for the entire country. The state's corporate laws are often written behind closed doors, without public input or oversight. This has enabled the rich and powerful to do business in the shadows, without facing the same level of regulation and scrutiny as other industries.

"What's the Matter with Delaware?" by Joe Biden explores these issues in depth. The book shows how the corporate laws in Delaware are written in favor of the rich and powerful, enabling them to do business in the shadows. It also highlights the negative impact of this practice on the economy and society as a whole.

One of the key criticisms of Delaware's corporate laws is that they promote tax avoidance and evasion. By creating multiple layers of private companies, individuals can reduce their tax liability and avoid paying taxes on certain types of income. This practice not only hurts the economy by reducing tax revenue, but it also creates a unfair playing field for businesses that are unable to engage in similar tax strategies.

Another issue with Delaware's corporate laws is that they lack transparency and accountability. The state's corporate laws are often complex and difficult to understand, making it difficult for the public to hold companies accountable for their actions. This lack of transparency can lead to corruption and abuse, as companies can engage in practices that are harmful to the environment, workers, and consumers.

In conclusion, Delaware's status as the "First State" has enabled international crime, sheltered tax dodgers, and diverted hard-earned dollars from the rest of the US. The state's business-friendly corporate veneer, low tax rate, and tax incentives have attracted both large and small businesses, as well as wealthy individuals. However, this industry has also been criticized for its lack of transparency and accountability, which has led to concerns about the state's role in writing the corporate code for the entire country.

To address these issues, it is important for Delaware to increase transparency and accountability in its corporate laws. This can be done by requiring companies to disclose more information about their operations and financial statements, and by establishing mechanisms for public oversight and input. Additionally, the state should work to promote fair and equitable tax policies that do not encourage tax avoidance and evasion.

In conclusion, Delaware's status as the "First State" has enabled international crime, sheltered tax dodgers, and diverted hard-earned dollars from the rest of the US. The state's business-friendly corporate veneer, low tax rate, and tax incentives have attracted both large and small businesses, as well as wealthy individuals. However, this industry has also been criticized for its lack of transparency and accountability, which has led to concerns about the state's role in writing the corporate code for the entire country. To address these issues, it is important for Delaware to increase transparency and accountability in its corporate laws, promote fair and equitable tax policies, and work to ensure that the benefits of business activity are shared with all members of society.

Dimension: 203 x 133 (mm)
ISBN-13: 9780691235745