How many more stabs will it take Delaware to kill the golden goose?
House Bill 255 is yet another knife to the heart to one of Delaware’s most important golden gooses or revenue sources – corporate franchise and income taxes. This revenue is the second-largest component of state revenue, and nets around 28% of total state revenue. HB 255, the bill to which this letter refers, decouples Delaware tax code from the federal system so that companies registered here cannot take advantage of the new federal tax law that enables the immediate expensing of capital expenditures. Generally, when a business buys equipment or buildings to use in its operations, it deducts a portion of the cost over a period of years depending on the nature of the item. The new tax law allows the deduction of the full cost, called expensing. When the cost is expensed, the business has more funds to use to operate and will pay less income taxes. With HB 255 passed, being registered in Delaware is immediately more expensive as compared to being registered in other states. And given the timing of this bill in a special session of the legislature at year end, if passed, companies may finish out the year here, then quickly switch to start the new year elsewhere.
The push for HB 255 comes after the state has processed its 2026 budget, with expenses growing faster than revenue, worrying some that the budget may not be balanced next year. Raising revenue with the anti-business HB 255 is not the solution. Instead, our government needs to consider reducing expenses, such as stopping altogether a $150 million garage and tunnel to Legislative Hall so our legislators need not walk in the rain. All of us should demand other reductions.
We will know soon how bad the effects of this bill will be. The state has already lost many companies. Among them are Tesla, Dropbox, Andreessen Horowitz, Roblox, Pershing Square Capital Management, The Trade Desk, Simon Property Group and Coinbase. This is due to court cases and regulations that are anti-business. As more companies leave, the state will have to find funds somewhere, and that somewhere is your pocket. You will pay more in taxes and get less in services.
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