Cloaks and daggers abound when you cross from New Jersey into its southern neighbor, according to a new study. The small state which is known for little other than its favorable incorporation laws – not unlike Monaco, but without the weirdo royalty – is also a land of secrets. The Tax Justice Network, which is billed as a tax justice rights group, has found that Delaware is the most secretive financial jurisdiction in the world.
So, if you think your cash is hidden in that Swiss bank account, maybe it’s time to bring that bread home.
According to the Tax Justice Network, Delaware pulled in $2.6 trillion in deposits from non-resident corporations and individuals in 2007. The survey by Tax Justice Network, which evaluated the laws, practices and size of inflows of 60 jurisdictions, put Delaware ahead of Luxembourg and Switzerland, which came in second and third. The Cayman Islands and United Kingdom came in fourth and fifth.
Sarah Lewis, the group’s executive director, says, “While the U.S. has been jumping up and down and saying ‘Aha, bad, wicked Swiss banks,’ the U.S. is doing exactly the same things as far as non-resident bank account holders.”
In Delaware, you can find close to 700,000 active entities registered, including around half the publicly traded companies in the United States.
Of course, the little eastern state has its supporters. Larry Hamermesh, who teaches business law at Widener University in what is apparently the secretive little state, says the criticism is unfair. He claims that flexible laws and expert courts attract businesses, adding, “Delaware is no more secret than any other U.S. state.”