US President Joe Biden (78) has big plans. He wants to lead the USA out of the Corona crisis into an age of prosperity and social justice. With tons of new jobs, many advantages for families, cheaper health offers. He plans to spend almost $ 6,000 billion on various programs. The rich and big companies should give him this money.
Tax increases for high earners and plugging loopholes are high on the US President’s list. “Many companies evade taxes through tax havens – from Switzerland to Bermuda to the Cayman Islands,” said Biden in his speech to Congress on Wednesday.
With a reform he wants to ensure that US companies have to add at least the difference between the taxes paid locally and the American tax rate.
What Biden hid: The USA is also extremely attractive for companies. Nobody more than the state of Delaware, to which Joe Biden moved as a child and was allowed to be a senator for 36 years before he made it into the White House for the first time as Barack Obama’s (59) vice.
The big ones are in Delaware
Around 65 percent of the 500 top-selling US companies have a branch in Delaware. Facebook, Google, and Apple, for example, are all Delaware corporations. Swiss companies such as Nestlé and Swissport also have branches there. In addition to 970,000 inhabitants, around 1.5 million companies are registered in the state.
There are three main reasons for this abundance of companies: tax savings, legal security and anonymity.
Saved ten times in taxes
Delaware imposes corporate taxes, but not on everything: income from patents, trademarks, or other intangible assets is tax-free. The companies mentioned and hundreds of thousands more have therefore founded subsidiaries in Delaware and assigned them trademarks and patents.
A study found that in 2011, Delaware received approximately $ 860 million in taxes from mailbox companies, a quarter of its entire budget. Other states lost around $ 9.5 billion.
Legal security and anonymity
In addition, over the past 200 years, Delaware has built a reputation for offering a great deal of legal security, which is important for companies. While in other states juries (i.e. laypeople) sometimes decide on complex commercial law issues, there is a special court in Delaware whose judges are proven experts who usually make quick decisions.
This has already set countless precedents, which among other things provides security against long and expensive legal disputes. «Your unique competence and commitment in questions of commercial law are unsurpassed», it says on the website about the courts of the state not entirely immodest – but not entirely wrong either.
The lawyer is in the commercial register
And there is one other point that attracts many to Delaware: There is hardly anywhere that is so easy to start a business. Because you hardly need anything. Only the name of the company and address and the person who founded the company must be entered in the commercial register.
Usually that’s a lawyer. But the authorities in Delaware do not know who is behind the company. A dream for shady characters who can easily launder money or conduct a criminal business from a credible US address. There are similar rules in other countries, but nobody has perfected them that much.
285,000 companies at one address
There is a one-story office building at 1209 North Orange Street in the capital, Wilmington. Bricks, security cameras, the “CT” logo next to the door. There is nothing spectacular about it, except that nothing less than 285,000 companies have their legal headquarters thereas reported by the New York Times. Among them big companies like Bank of America, Coca-Cola or Ford, but also fraudsters and smugglers have already been discovered in the “Corporation Trust Center”.
The goal of all is the same: save taxes, avoid regulations, find mild dishes or, if necessary, cover up traces.
Biden’s hands are tied
Wouldn’t Joe Biden therefore have to look inland first and look for additional income before denouncing Switzerland? He lacks the opportunity to do so. In the USA, tax competition is organized in a very federal way and is therefore a matter for the states. The White House is only allowed to have a say in federal taxes, hence the attack on foreign tax havens.
But the domestic ones are also coming under pressure. In January the US Congress decided that holding companies could no longer be founded anonymously. The USA creates a national register in which the beneficial owners of companies must be entered. Name, address, date of birth and a copy of the driver’s license or passport are now required.
Criminals will therefore think twice before coming to Delaware. Delaware supported the law for that reason. However, under one (assumed) condition: the register can only be viewed by banks and law enforcement authorities.