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HB 255: The $400 Million Lie that Crushes DE Businesses - Sample Email to Senators

It can really annoy the heck out of me, but I make myself read articles pushed out by the Democrat Party to try to understand their rationale and why they do what they do. I guess it’s a matter of “know thy enemy.” Mostly, I try to reason how they can seem so well-meaning and yet remain so confused, getting things so wrong. Unfortunately, their bad ideas don’t just stay on paper; they’re the party in power here in Delaware, which means those bad ideas often become reality. So, if you haven’t gone through this exercise yourself, here’s a breakdown of how Democrats and Republicans differ on House Bill 255.


House Bill 255 Short Version

Last week, the Delaware House passed House Bill 255, a measure Democrats say is needed to “protect the state budget” from a projected $400 million shortfall. Republicans countered that it’s an unnecessary and damaging overreaction that risks Delaware’s reputation as the nation’s corporate capital.


Where Did Democrats Get This $400 Million “Shortfall”?

Simply put, it doesn’t exist. When Congress passed the One Big Beautiful Bill Act (OBBBA), it changed how companies can deduct normal business expenses (such as research, development, and equipment purchases). Instead of being forced to spread those deductions out over several years, companies are now allowed to take them all at once. In other words, businesses still pay taxes, they just might pay a little less in the first year and more in later years. Over time, it balances out. This is actually FAIR for businesses that can now deduct expenses the year they incur those expenses.


What Is Decoupling?

When Congress passes tax changes, Delaware’s tax law automatically adopts them unless the state legislature votes to “decouple.” What HB 255 does is decouple Delaware’s tax code from the federal OBBBA, forcing Delaware companies to return to the old system of spreading out their deductions. In doing so, the state removes a key flexibility and incentive that helps businesses invest, expand, and hire here in Delaware. And what we don’t want to do is scare away any more potential large businesses from incorporating or expanding in Delaware.


So What Will Companies Do Once HB 255 Passes?

One of the flaws of the Democrat lack of rationale is that no one actually knows how companies will choose to take their deductions. It’s all speculation. Some may accelerate deductions, others may not. Yet Democrats seized on the most pessimistic model, a “worst-case scenario” projection, that every single company would take 100% of their allowed deductions in the first year, and labeled it a $400 million shortfall. Again, not a shortfall; those tax revenues would still come to Delaware, just delayed by one year. Also, only if no additional growth or new investment occurred. But by decoupling under HB 255, the risk of slowing growth becomes higher.


Why a $400 Million Tax “Shortfall” Is Not the End of the World

Delaware already has large reserve and budget-smoothing funds specifically designed to absorb short-term revenue fluctuations like this. But instead of using those tools as intended, Democrats are planning to spend the reserves while increasing the size of government with increased spending. So now they’re panicking over a projected shortfall they themselves are creating, by spending our reserves, and trading short-term political comfort for long-term economic risk — the risk of losing even more companies and industry in Delaware.


But Democrats Think They Are the Heroes of Fiscal Caution

Democrats framed HB 255 as a safeguard against what they call “costly corporate giveaways.” But that simply isn’t true. Companies will still pay the same amount in taxes, the only difference is that they now have the freedom to structure those payments in a way that best supports their growth and success, which is good business sense and FAIR to Delaware businesses.


Of course, Democrats claim they’re doing this “for the children” — that the state can’t handle unpredictable tax payments because it might threaten funding for schools, safety, or healthcare. They say they’re protecting Delaware’s fiscal health from federal turbulence. But what’s really happening is that the state can’t budget well enough for itself, so it forces businesses to do the budgeting instead, and that’s NOT fair.


The Republicans’ Perspective: Business Confidence and Economic Trust Matters

House Republicans — joined by nearly all major business groups in Delaware, including the State Chamber of Commerce, the Business Roundtable, the Society of CPAs, and Delaware Bioscience Association — argue that the projected “shortfall” is exaggerated, the process rushed, and the risk of long-term damage to Delaware’s business climate severe. And really, who knows better how to run an economy: the people who actually build and manage successful businesses, or taxpayer-funded government bureaucrats? That's a rhetorical question.


Democrats’ Plan to Deplete Our Rainy Day Reserves

Delaware’s budget is designed to handle fluctuations in tax revenue with a sizable reserve — our “rainy day fund.” Unfortunately, and unwisely, Governor Matt Meyer is preparing to deplete that reserve with, you guessed it, increased government spending. His FY 2026 budget proposal projects spending growth of about 7.4%, while revenue is expected to grow only 1.9%.

Here’s what Governor Meyer himself said:

“If we’re asking residents to pay us tax every year, that tax should be an accurate number of what we’re going to actually spend. I’m not a big fan of collecting excess revenue and socking it away.”

So while our reserves appear healthy on paper, the governor’s own budget and comments shows a willingness to drain them rather than strengthen them, a short-sighted move that risks leaving Delaware unprepared when the real rainy day comes.



But It Gets Worse — The True Risk

According to DEFAC projections, corporate income tax brings in about $300–$400 million per year. HB 255 supporters claim that not decoupling would cost Delaware roughly $410 million over three fiscal years.


However, corporate income tax is only 8–10% of the state’s revenue. The much larger corporate franchise and license fees bring in about $2.2 billion, nearly one-third of the entire budget.


So Democrats are reacting to a temporary timing shift in a small, volatile revenue category while ignoring the much larger, more stable revenue stream Delaware truly depends on, and risking losing it!


The Truth About the Amendments

And here’s what Democrats quietly did after the backlash: They added a sunset to their own decoupling provision. That’s right, even they don’t have confidence in its long-term impact, so they now require it to automatically expire after the 2030 tax year. They also added a requirement that the Department of Finance produce a full revenue-impact report for the December 2027 DEFAC meeting. If their numbers were solid, they wouldn’t need a sunset or a future report to justify the policy. Proof, democrats are unsure and confused, but moving ahead anyway.


The recent amendments — the sunset clause, the DEFAC report requirement, and the acknowledgment that the R&D provisions already expire in 2025 — don’t fix anything. They simply confirm that Democrats themselves do not trust their own assumptions. If the projected “shortfall” were real, they wouldn’t need a sunset or a future impact report.


HB 255 still injects long-term uncertainty into the business climate. It still punishes investment. And it still burdens the very corporations that produce the bulk of Delaware’s revenue.



The Better Path Forward

Delaware’s strength has always rested on trust and fairness, fairness for businesses that the rules won’t suddenly change, and trust from citizens that their government will manage money wisely. HB 255 puts both at risk.


While several states have taken steps to partially decouple from recent federal tax changes, HB 255 stands out as one of the most aggressive decoupling measures in the country, both in the speed of its implementation and in the sweeping way it targets multiple corporate deductions at once, including retroactive years.


Other states that have partially decoupled can afford to do so because their economies don’t rely on corporate-filing revenue like Delaware’s does. Delaware can’t. Our competitiveness is built on predictability, and HB 255 trades that away for speculative, short-term budgeting comfort.


If Delaware wants to remain the nation’s incorporation capital, we must stop governing through panic forecasts and start governing through discipline.



The 38th District Republican Club Recommends:

  • Pause HB 255’s implementation until the December DEFAC forecast and an independent analysis confirm real revenue risk.

  • Protect — don’t spend — the state’s reserves, which exist for true emergencies, not habitual overspending.

  • Reinstate budget discipline by tying spending growth to economic growth.

  • Reaffirm Delaware’s commitment to stable, federally aligned tax policy — the foundation of our reputation as the nation’s corporate home.


Delaware doesn’t face a crisis of revenue. It faces a crisis of restraint. The answer isn’t another decoupling. It’s restoring the fiscal discipline that once made Delaware strong.


What YOU Must Do Next

HB 255 has passed the House, and now it moves to the Senate for a final vote. This is the moment when Delawareans must make their voices heard. Every single senator — Democrat and Republican — needs to hear directly from the people they represent. HB 255 is too rushed, too risky, and too damaging to Delaware’s economic future to let it slide through quietly. I urge you to email every one of our state senators and tell them to vote NO on HB 255.




Dear Senator,

I am writing to urge you to vote NO on HB 255.


This bill is being rushed through without a clear understanding of its real fiscal impact. HB 255 risks harming Delaware’s long-standing reputation as the nation’s incorporation capital by creating instability for businesses that invest, hire, and grow in our state.


We cannot risk rewriting tax law that affects only 10% of our revenue while jeopardizing the one-quarter of our budget that depends on Delaware’s incorporation system.


Delaware does not have a revenue crisis, it has a spending crisis. And I urge you to not approve draining our reserves or rainy day fund. Those funds are designed to absorb short-term tax revenue fluctuations, not to backfill structural overspending.


Please stand up for Delaware’s economy, its workers, and its future. Vote NO on HB 255.


Sincerely,

[Your Name]






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This newsletter is intended for informational purposes only. The content provided is for general information and entertainment purposes, and should not be construed as professional advice. The views and opinions expressed in this newsletter are those of the authors and do not necessarily reflect the official policy or position of the Club. Readers are encouraged to seek professional guidance or conduct their own research when making decisions based on the information provided in this newsletter. The Club does not guarantee the accuracy, completeness, or usefulness of any information presented in this newsletter and will not be held liable for any errors or omissions. Website paid for by the 38th District Republican Club PAC and not authorized by any candidate or candidate’s committee.


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