I appreciate your feedback on Keandra McDole’s piece in the Delaware News Journal. Many of you said it’s high time that America’s First State’s largest newspaper put a spotlight on the corruption that I’ve been pounding the pavement on for years. Finally, they get it. They see the economic damage and the reputation destruction a corrupt Chancery Court is doing to our great state.
Now that the newspaper of Delaware is concerned, will it force our politicians to act on this crisis?! Keep your feedback coming on this! Read the important story below. It’s time to solve this threat.
JUDSON Bennett–Coastal Network
Keandra McDoleSpecial to the USA TODAY Network
As every native Delawarean knows, our state is the business incorporation capital of the world. Fortune 500 companies want to incorporate in our state for tax reasons and to take advantage of Delaware courts created to handle their specific cases. And, of course, Delaware’s economy benefits financially from these special business laws.
In fact, 20% of our state’s entire budget relies on the incorporation industry and LLC fees. This means that of $14.5 billion of our state’s spending plan, $3 billion comes directly from the incorporation industry and LLC fees. Our schools, roads, police and fire services, and public assistance for those in need — from Wilmington to Dover to Millsboro — rely on this 20%.
Right now, Delaware is facing a crisis that we should all be concerned about. Major corporations like Twitter, TransPerfect — which is a leader in the world of translation services — and many more companies have announced they are leaving Delaware for Nevada. With their departures, these corporations are taking major revenue away from us.
The answer is very simple if you are wondering why these companies are leaving — corruption throughout the Delaware Court of Chancery. The court has made a name for itself in not being transparent or impartial in its structure and its rulings. That is enough for companies to look elsewhere to resolve their disputes fairly.
The chancery court ordered the forced sale of TransPerfect, although the company’s founders and employees objected. Imagine being a respected business owner, and a court tells you that you have no choice but to sell the company you built and founded and have no voice in the matter. The Delaware Court of Chancery does not try to find a middle ground; instead, they use their authority to bring big bucks to the lawyers and systems in front of them. The TransPerfect case mirrors Twitter’s situation — that is why one of the biggest social media platform companies left Delaware for Nevada. Nevada doesn’t have conflict of interests or an entrenched “old boys’ club,” and is consistent and fair in their court rulings on business disputes.
If more businesses decide to follow TransPerfect and Twitter’s lead, Delaware will lose significant tax revenue, which affects all of us who live here in Delaware. And the services that will feel the most loss fall within affordable housing, healthcare, and education — crucial services needed for our most vulnerable neighbors.
As a Black Wilmington native and racial justice advocate, I know personally that loss of tax revenue will disproportionately punish people who need those investments the most. Historically, low-income communities, Black and Latino residents have always been left out, and will be even more left out if tax revenue dwindles. Today in Delaware, Black and Latino people are each more than twice as likely to live in poverty than white people. And while white unemployment in Delaware is 3.4%, it is higher for Latinos at 5% and 7% for Black individuals. I’m not sure the all-white chancery court recognizes the impact their decisions have on the communities of color.
Delaware has a long way to go to reverse the chancery court’s reputation, and it requires acknowledging the unethical ways of the court system. We need a judicial code that incorporates reforms and demands transparent oversight, accountability, diversity and fair rulings to restore faith in Delaware’s position as the “incorporation capital of the world.”
We have seen Nevada take our companies, and more companies will follow suit if we remain silent rather than fighting for change. Further, bold changes are needed to make Delaware a vibrant, prosperous and safe state for our most vulnerable communities for generations after us. We need to look forward to that change but to accomplish it, we need to make our elected leaders hear our voices.
Keandra McDole is a Wilmington activist.