How Delaware Became the Corporate Capital of the World… and How HB 400 Could Change That - by Nick Miles
- 38th District Republican Club
- 4 days ago
- 7 min read
How Delaware Became the Corporate Capital of America
For generations, Delaware has held a unique and powerful position in the American economy. It was the undisputed corporate capital of the United States. That success did not happen by accident. It was built through intentional policy decisions that made Delaware the most attractive place in the country to do business.
To understand why House Bill 400 is such a mistake, we need to look at how Delaware got here.
Former Governor Pete du Pont recognized that Delaware could not compete on size, population, or natural resources. Instead, he focused on policy. His administration worked to create a legal and economic environment that was predictable, efficient, and competitive. Businesses knew what to expect, and they knew Delaware would not burden them with unnecessary costs.
That approach worked. Delaware became home to the majority of Fortune 500 companies. Our Court of Chancery became the gold standard for corporate law. Incorporating in Delaware became the default choice for companies across the country. The philosophy was simple: government should create the conditions for economic growth, not stand in the way of it.
That Model Is Being Tested
Today, that model is being tested. Over the last two years, major companies have begun to leave Delaware or consider leaving. Tesla and SpaceX moved out of Delaware following major court decisions. Coinbase relocated its incorporation to Texas. Other companies like Dropbox and TripAdvisor have explored similar moves.
This trend is not theoretical. It is real, and it is growing. Companies are raising the same concerns. They point to rising costs, increased legal uncertainty, and better opportunities in other states like Texas and Nevada. Those states are actively competing for the business Delaware once took for granted.
What House Bill 400 Does
At a time when Delaware should be strengthening its competitive advantage, House Bill 400 moves us in the opposite direction. This bill raises annual taxes on LLCs, partnerships, and other entities. It increases filing fees, administrative costs, and trademark fees. It dramatically expands the potential cost of expedited services.
The state estimates this will generate more than 142 million dollars in new revenue every year. But that revenue comes from somewhere. It comes from the businesses that are already questioning whether Delaware is still the best place to operate.
This creates a serious risk. Delaware built its reputation on predictability, efficiency, and reasonable cost. HB 400 weakens that foundation. When businesses are already evaluating other states, raising costs sends the wrong message. It tells them they will pay more to stay in Delaware.
Other states are not doing this. They are lowering barriers and creating incentives to attract companies. This bill does not just impact large corporations. It will affect small businesses and startups as well.
Higher annual fees mean less capital for growth. Increased filing costs make it harder to start and scale a business. Compliance becomes more expensive, and those costs are felt most by smaller operators who do not have the resources of large corporations. For a small business, an extra hundred or two hundred dollars is not insignificant. It is real money that could be reinvested into hiring, equipment, or expansion.
The Bigger Warning Sign
The broader concern is what this bill represents. It suggests Delaware is beginning to rely on its past reputation rather than actively protecting it. That is a dangerous position to take in a competitive environment.
Delaware is still strong, but the warning signs are clear. Companies are leaving. Other states are gaining ground. Confidence is being tested. House Bill 400 does not address those challenges. It adds to them.
Delaware became the number one place to do business because leaders made it a priority to keep it that way. They understood that success required constant attention and discipline. If we move away from that model, we risk losing what made Delaware special in the first place.
Once that shift begins, it will not be easy to reverse. Delaware should be working to attract businesses, not push them away.
What This Means for Small Businesses in Delaware
While much of the conversation around HB 400 focuses on large corporations, the reality is that this bill will also impact the backbone of Delaware’s economy: small businesses. Not just the businesses that incorporate here, but the businesses that live here.
Think about the small, family-owned shop on Main Street. The local contractor. The small restaurant trying to make payroll. The startup operating out of a home office. These are the businesses that do not have teams of lawyers or accountants. They do not have layers of financial insulation. Every dollar matters.
And in Delaware, these businesses already operate under multiple layers of cost. First, they pay to exist as a business. Incorporation fees, annual taxes, filing costs. Those are going up under HB 400.
Then, if they actually operate here in Delaware, they face another layer. Municipal business licenses. Local fees. Permits. Inspections. Renewals. Depending on the town, those costs add up quickly.
So the question becomes simple: How many times are we going to charge the same small business just to operate? A small business in Delaware is not just paying once. It is paying at the state level and again at the local level. Now, with HB 400, the state portion is increasing across the board.
For a large corporation, these increases are a line item. For a small business, they are a decision. Do you hire that extra employee? Do you invest in new equipment? Do you expand your hours? Or do you absorb another cost just to stay compliant? That is the real impact.
We often talk about “doing business in Delaware” as if it only applies to corporations on paper. But for small businesses, “doing business” means something very real. It means opening the doors every morning, paying employees, covering overhead, and trying to turn a profit in a tight environment.
Every additional fee chips away at that margin. And it raises a bigger question that policymakers should be asking: At what point does it become easier to do business somewhere else?
Other states are actively working to attract small businesses. They are simplifying processes. Reducing fees. Creating incentives. Meanwhile, Delaware is adding cost on top of cost.
This is not just about incorporation anymore. It is about whether Delaware remains a place where small businesses can realistically start, grow, and stay.
Because when a small business struggles, it is not just a balance sheet that suffers. It is a job not created. It is a storefront that goes dark. It is a family that takes on more risk just to stay afloat. And it is a community that loses something it cannot easily replace.
That is what is at stake.
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Take Action Now
HB 400 has already passed the Delaware House and is now in the Delaware Senate.
Contact the Executive Senate Committee members and urge them to vote NO on HB 400.
David McBride
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