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Actually I have to take you up on this, people who run large corporations say that it's the strong legal regime they have. In reality, it's a tax shelter. The o

Actually I have to take you up on this, people who run large corporations say that it's the strong legal regime they have. In reality, it's a tax shelter. The only question is "How much does Delaware care about their status as a real legal regime vs their actual purpose: a tax haven". They know it's difficult to defend "We're a tax shelter sucking revenue out of the rest of the union", so they argue "We have strong legal structures" but we all know that Coca Cola wouldn't be incorporated in Delaware if they could save a cent by being incorporated in Georgia.

FrobeniusTwist 4y ago
What tax, specifically, is Delaware a haven from? Incorporating in Delaware doesn't get you out of Federal income taxes, or state income taxes (to the extent your operations, which are probably not based in Delaware, subject you to income taxes from various states), or sales taxes, or property taxes, etc., etc. There are some taxes that are avoided by incorporating in Delaware, as opposed to some other jurisdiction, but they round to zero when compared with taxes imposed without regard to where you happen to be incorporated.
sudosysgen 4y ago
I think it's both. Many states could compete with Delaware by also becoming tax havens. They can't anymore, because there is now more to it that simply being cheap.
hn_throwaway_99 4y ago
This isn't really true, for the simple reason that where a company is incorporated has little impact on the tax a company pays. Yes, there are some business tax benefits for being incorporated in Delaware, but they're negligible for a large corporation, and for a smaller business will probably end up costing you more. I mean, if your headquarters are in California, you have employees in California, and you get lots of revenue from California, the California government doesn't care much where you are incorporated - they'll get their pound of flesh regardless.

FrobeniusTwist 4y ago

What tax, specifically, is Delaware a haven from? Incorporating in Delaware doesn't get you out of Federal income taxes, or state income taxes (to the extent your operations, which are probably not based in Delaware, subject you to income taxes from various states), or sales taxes, or property taxes, etc., etc. There are some taxes that are avoided by incorporating in Delaware, as opposed to some other jurisdiction, but they round to zero when compared with taxes imposed without regard to where you happen to be incorporated.

sudosysgen 4y ago

I think it's both. Many states could compete with Delaware by also becoming tax havens. They can't anymore, because there is now more to it that simply being cheap.

hn_throwaway_99 4y ago

This isn't really true, for the simple reason that where a company is incorporated has little impact on the tax a company pays. Yes, there are some business tax benefits for being incorporated in Delaware, but they're negligible for a large corporation, and for a smaller business will probably end up costing you more. I mean, if your headquarters are in California, you have employees in California, and you get lots of revenue from California, the California government doesn't care much where you are incorporated - they'll get their pound of flesh regardless.