Delaware Moves to Increase Corporate & LLC Franchise Tax- again
Well, if you can’t leglislate fiscal responsibility, kill the goose that lays the golden eggs. Rob Peter to pay Paul. Cut off your nose to spite your face.
HB 239
Title: AN ACT TO AMEND TITLE 6 OF THE DELAWARE CODE RELATING TO TAX ON LIMITED LIABILITY COMPANY.
HB 240
Title: AN ACT TO AMEND TITLE 8 OF THE DELAWARE CODE RELATING TO CORPORATE FRANCHISE TAX.
HB 241
Title: AN ACT TO AMEND TITLE 6 OF THE DELAWARE CODE RELATING TO TAX ON LIMITED LIABILITY COMPANY.
It’s clear how I feel about these bills. The sad thing is that they will probably pass. Why is that a bad thing for Delaware?
Well, how about the fact that the incorporations revenue accounts for some tremendous number like 22% of the general fund? Without checking my facts here, I’d say that the revenue generate by the corporate industry is probably more than double most other states in the union. In business terms, that is what we call a niche. Find your market; provide the service better than anyone else, for the best price. Make money. It’s that simple- if you can find that niche.
The fact is, this kind of legislation is short sighted, and frankly the easy way out. It’s probably not a politically dangerous proposal, simply because most everyday Delawareans don’t know what the big picture is here. And why would they? That’s not part of the publicity that will surround this bill, as it is passing at the 11th hour in Dover before June 30th. All they will know if that the State is moving to cut the budget shortfall. Sure, it will help close the 800 million dollar budget gap, but at what cost? At a time when Delaware is facing massive job losses in the auto industry, it’s hard to understand why any elected official would propose legislation that will ultimately make Delaware less attractive as a corporate domicile- and cost Delaware jobs. That’s right; this is about keeping jobs in one industry that isn’t suffering massively in this State (yet). And yes, anybody out there saying that it won’t cost Delaware corporate registrations and renewals is in likely misinformed/uninformed, flat out lying, or in need of the gambling addict’s hotline (1-800-850-8888). It will raise money in the short term; it will hurt Delaware in the long term. The shame of it is- that’s politics for you.
Message to Dover: Please don’t gamble with our State’s future. You can only come back to this well so many times before it will dry up, and it will dry up if you keep taking it for granted.
Pay close attention to your elected reps votes on this one Delaware, you’ll need to know who voted for this one so you know who to hold accountable for the fall out.
I couldn’t agree more. This is bad government at its best. How many times in the last 5 or 6 years have similar increases occurred? At the very least, the lawmakers should be spreading the “growing pains” around a bit. Franchise taxes already increased last year; there is a better way.
I hear you. Why not increase the online filing fees for UCC financing statements and amendments? The fact of the matter is that there isn’t a choice when it comes to UCC filings- they are required to occur in the State when the company is incorporated. If the legislature keeps finding ways to marginalize the Delaware advantage, then even residual revenue streams (like UCC fees) will disappear.
Thanks for the feedback Karen.
i just formed a llc in delaware this year. i am unhappy to learn of this situation. i was told that the annual tax increased last year and i did not expect this to happen again this year. it would be unheard of to do this in europe. i feel cheated and i will not renew my company if this law takes effect.