Delaware is known for aggressive corporate tax-sheltering practices. Because of a provision in its tax system, known as the “Delaware loophole” or the “Passive Investment Company loophole,” corporations incorporated in the state can avoid paying any income taxes. Delaware also allows full secrecy to companies which register in Delaware but operate somewhere else. For companies that do actual business in the state, Delaware offers a variety of tax breaks, many of which are as-of-right, meaning they are available to any company meeting broad requirements.  

The Delaware Division of Small Business (DDSB) manages grants, including the Delaware Strategic Fund, the state’s main subsidy given to companies simply for staying put. The grants are formally awarded by the Council on Development Finance. The Department of Revenue (DOR) manages as-of-right tax programs. The Delaware’s Transportation Secretary oversees the Transportation Infrastructure Investment Fund (TIIF). 

The DDSB discloses recipients of grant programs in its Annual Reports. The Council on Development Finance meetings are public, and information on applicants and grant amounts is posted to the DDSB website 10 days before the meetings. Tax-based subsidies have no disclosure of any kind.  

The state lists only two programs under the GASB 77 rule, the Bank Franchise Tax Job Creation Credit and the Historic Preservation Credit. About half of localities report lost revenue to tax abatements. Because Delaware’s school districts are managed by state agencies, they do not issue financial reports and thus there is no school-related GASB 77 statement.  

Every two years, the DOR publishes “Tax Preference Reports” which include the costs of tax-based subsidies and basic program assessments. However, the state lacks an in-depth and rigorous evaluation of its grants and tax-based subsidies.