Delaware Faces Exodus of Tech Companies

[BumRushDaShow]

Source: Newsweek

Published Feb 01, 2025 at 7:36 AM EST


Delaware is facing a further exodus of tech companies amid reports that Meta and Dropbox are moving out of the state. Newsweek has contacted Meta and Dropbox for comment via email.

Why It Matters

Delaware has long been considered a business-friendly state due to its corporate tax advantages, and is home to multiple large companies. However, backlash against the First State has intensified after Delaware Judge Kathaleen McCormick ruled that Tesla CEO Elon Musk's record-breaking $56 billion compensation package was excessive.

Musk, who has become increasingly influential in both the political and corporate world, urged companies to pull out of the Democratic-led state. In February 2024, he announced that SpaceX was relocating its incorporation from Delaware to Texas, following Tesla's corporate move from California to Texas in 2021.

What to Know

Meta, the parent company of Facebook, Instagram, and WhatsApp, is reportedly considering moving its incorporation from Delaware to another state, such as Texas, according to reports in the national press. The company has been in talks with Texas officials about the potential move, though other states are also being considered. An unnamed source told The Wall Street Journal that these discussions predated former President Donald Trump's return to office. Musk holds a role in the new Trump administration as head of the Department of Government Efficiency (DOGE). The move would not involve Meta relocating its corporate headquarters out of California.

Read more: https://www.newsweek.com/delaware-exodus-tech-meta-dropbox-elon-musk-2024596

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I didn't even know tech companies were incorporating there. It seemed to be mostly the banking industry and other types of corporations.

[in2herbs]

1. Delaware incorporation laws are very friendly to secrecy, that is how it became #1 and stayed #1 until now. nt

[Quanto Magnus]

11. They also have one of the strongest corporate veils

Executives and business owners are (personally) financially protected almost completely in Delaware.

[we can do it]

2. Good riddance

[lapfog_1]

3. both of my startup companies

were incorporated there. Basically it is a P.O. Box and some papers. plus tax revenue for the state ( if you make money in your corporation ) and lawyers make some money for this function.

[hatrack]

4. LIke Wyoming, but with better beaches . . .

.

[lapfog_1]

6. as was explained to me by my lawyer

Delaware has low state corporation taxes compared to other states AND is very friendly to corporations if you should be sued over something.

I never make any corporate income with either startup. One was a "flop", the other was sold for a decent amount of money for the patents I invented ( and spent many 100s of thousands of dollars with patent attorneys and filings and hiring people to build working prototypes, etc),

but the taxes I paid to Delaware were, as I recall, very minimal. Still I had hired tax professionals for a pretty penny to make sure my taxes were fully paid.

[hatrack]

8. Sheridan, WY, which is home to about 15,000 actual people, is HQ for 1,000s of businesses

Of course, they're nothing more than PO boxes, but same thing.

[FakeNoose]

12. Most DE companies are nothing more than a locked safe deposit drawer at a bank

... and maybe a PO Box somewhere in the state.

It's not a manufacturing hub, there's no tech innovation or job creation going on there.
Just a lot of people driving through on their way to somewhere else.

[BumRushDaShow]

14. Au contraire... They are the home of GE Aviation (and GE Aerospace)

They have facilities in Wilmington, Dover and Newark.

I had an uncle who was an engineer there. They design and manufacture aircraft engine parts and engines.

But more critically, they are the home of the famous "Du Pont ( de Nemours)" family and their companies that are involved in all kinds of products (pharmaceuticals, chemicals, etc). I.e., they invented nylon and the now-infamous Teflon and have been involved in the many PFAS lawsuits. Their spin-off research and manufacturing offices/plants are all over Delaware.



Delaware has always been a sleepy, low-key, no drama state that packs a big punch (and like NH, has no sales tax, so Philly people practically live there for big purchases).

[FakeNoose]

15. Yes but GE isn't like any other American company

The point I'm making is this: most of the people who benefit from Delaware's pro-business policies and tax laws don't live, work or vote in Delaware.

[BumRushDaShow]

16. Yes but I am noting that Delaware DOES have manufacturing

even if you ignore GE. Dupont (and its subsidiaries) have been a huge "thing" there since WAY before there was this banking/incorporating stuff. Dupont alone, comes in #25 in the world for chemical product manufacturing.

[Prairie Gates]

5. This article was written by Musk partisans and given to this so-called journalist as a press release

It shouldn't be in LBN.

[BumRushDaShow]

7. There were a flurry of articles yesterday about Meta leaving, as an example

Meta Said to Explore Incorporating in a Different State

Meta in talks to reincorporate in Texas or another state, exit Delaware, WSJ reports

Meta Eyeing Possible Reincorporation In Texas, Report Says

Meta considers reincorporating in Texas. It would be following Tesla and SpaceX in leaving Delaware.

When it comes to U.S. media, pick your poison.

[Jit423]

9. Let them go following after Musk. They will go down with him also. There are others out there that can fill ay void.

Texas is getting too much Musk play and it might not be so good. We will see.

[IbogaProject]

10. popular for startups as investors like the cour there

[woodsprite]

13. Over 65% of the Fortune 500 companies are incorporated in Delaware. nt