Corporate taxes – Too high or just right?


Good afternoon,

A split may be developing within the business community over the state’s corporate tax environment. 

Earlier this week, the Delaware Prosperity Partnership pushed out a study from accounting giant KPMG and the Tax Foundation showing the state ranking third in its corporate tax climate.

DPP is an organization that gets funding from state and corporate sources. Its mission includes putting the state in the best possible light when companies here or elsewhere want to stick around or move operations into the state.

It has been largely forgotten that Delaware did make changes to its corporate tax structure after other states appeared to be more competitive. The change led to a loss in tax revenue for a time but helped keep Chemours, DuPont, and other companies headquartered in Delaware.

The most recent tax ranking runs counter to the long-standing narrative from public policy groups, the  Caesar Rodney Institute, and A Better Delaware. 

CRI is a decades-old public policy group, while A Better Delaware is the more recent brainchild of local Shoprite supermarket executive and online media company owner Chris  Kenny. DuPont Country Club co-owner Ben DuPont, a co-founder of a Better Delaware,  is no longer listed on the organization’s  website.

Both groups view corporate taxes in the state as too high, with the Caesar Rodney Institute pushing for a cut in corporate, gross receipts, and personal income taxes. 

CRI falls back on the argument that Reagan-era tax cuts and the 2017 federal tax cuts pushed the economy to new heights.

Not mentioned is the deficit from the 2017 federal tax cuts that will send the red ink to further new heights when combined with CARES and other Covid-relief legislation.

State tax cuts and an income tax increase for wealthier Delawareans long promoted by state Rep. John Kowalko, D-Newark, aren’t going anywhere.

CRI claims that the use of the state’s reserves gets around restrictions in using federal assistance for state and local tax cuts.

That strategy would surely be tested in court since the tax cuts would not be possible without the flood of federal money into the state.

For now, most of the attention in the General Assembly is focused on social equity issues that include a higher minimum wage. 

Enjoy your weekend, and have a happy Mother’s Day.  This column and newsletter returns on Monday. – Doug Rainey, chief content officer.

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