E Why Delaware Exists

Delaware owns the proud distinction of being the First State. However, it appears that, these days, Delaware exists to take advantage of all the other states. Without its major industry, it would not be a very prosperous state. Delaware exists to hide money. It has been reported that there are a million companies registered in Delaware. While that number is up for dispute, there are at least hundreds of thousands of companies in Delaware, compared to only 900 thousand residents. 

Transparency International has singled out Delaware for special status as a tax haven. It is clearly the biggest tax haven in the United States. Delaware joins Nevada and Wyoming as places to form a shell corporation to hide money. (Learn more about Transparancy International and why Donald Trump may not want to divulge his tax returns, as you read on.)

It is said that hiding money is the business of Delaware, contributing a quarter of its state revenue. According to William Black,  professor of Economics and the Law at the University of Missouri and Kentucky:

This is Delaware’s industry. They sell corporate leaders protection from compliance from fiduciary obligations and the provisions of law like anti-money laundering statutes.

 

Flag of Delaware

 

However, there is more to Delaware's business of hiding money. In reality, Delaware is just a franchise:

However, for James Henry, a senior fellow with the Columbia University Center on Sustainable Investment, Transparency International’s singling out of Delaware for “social sanction” misses the mark.“This comparative analysis that just singles out an individual tax haven jurisdiction like Delaware is misleading,” according to Henry. “Sophisticated tax dodging never just relies on one jurisdiction. This is a global industry that stitches these sophisticated schemes together across multiple jurisdictions using banks, law and accounting firms around the world.”

We know that London is the largest tax haven in the world, and London is the center for the hiding of wealth:

...London sits at the centre of a web of satellite jurisdictions. It is the most transparent of the jurisdictions in the index, but its importance in global offshore finance means that the secrecy it does provide has the potential to do more damage than, for example, small island havens which are less transparent but play a smaller role in global offshore finance.

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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