Speaking of startups generally rather than YC specifically: 1) Essentially no startups on the VC trajectory are incorporated anywhere but Delaware. This is l

Speaking of startups generally rather than YC specifically: 1) Essentially no startups on the VC trajectory are incorporated anywhere but Delaware. This is largely because investor confidence in the enforceability of their rights to what they're purchasing trumps every other factor in incorporation. For companies which have substantial business dealings outside of the US, they typically have foreign subsidiaries which are owned lock-stock-and-barrel by the US entity. That is not a tax optimization. 2) The overwhelming majority of startups pay no corporate income tax. They use an old, old strategy to avoid it: don't make profits. If you have no profits, you pay no income taxes, and instead book an asset for all the taxes you'll get to offset after you finally start making money some years after IPO. Startups don't simply avoid making profits because they've got creative international structuring going on where they're charged $15 million a year for their own IP by an entity in Ireland. They don't make profits because their revenues are far lower than their expenses. They run a substantial risk of running out of money and folding catastrophically and this often happens. Startups, like all businesses, generate substantial tax revenue outside of their corporate income tax returns. California, for example, will hit every company doing business there with a franchise tax, which is basically "welcome to California, for the privilege of doing business here please remit $800+." Startups are also filled with highly compensated employees when they're doing well, and these highly compensated employees both pay substantial income taxes and have substantial FICA/etc taxes paid incident to their employ by the company.