Image by David Vines.
When he ran for president in 2012, Mitt Romney famously declared that corporations are people. What brought laughter then has begun to be reality today, however. A little noticed court decision in Delaware confirmed that corporations have the right to vote in that state.
I wish this was a joke. But it’s not funny at all. Delaware corporations, however, won’t face the death penalty as Delaware abolished it more than a decade ago, so we won’t see a manifestation of one of the best signs at Occupy Wall Street: “I’ll believe corporations are people when Texas executes one.”
Business entities will be voting in local elections in Fenwick Island and a few other Delaware towns. This came to wider attention on May 26 when a Delaware Superior Court judge ruled that Fenwick Island allowing “artificial entities,” including corporations and limited liability companies, that own property in the town to vote in town elections is legal under state law. In handing down the decision in American Civil Liberties Union of Delaware vs. Town of Fenwick Island, Judge Craig A. Karsnitz wrote that the ACLU, which brought the lawsuit in conjunction with Fenwick residents, failed to find “clear and convincing evidence” that the plaintiffs overcame a presumption that what the Delaware Legislature enacts is constitutional. The judge did acknowledge there were concerns here, albeit dismissing them. He wrote:
“I appreciate that Plaintiff may disagree with Delaware’s policy of authorizing certain municipalities to allow voting on behalf of entity property owners., Visions of faceless large corporations or even HAL [the murderous computer in 2001: A Space Odyssey], controlling a small town are frightening and the stuff of science fiction. However, Plaintiff has not demonstrated that this policy violates the policy of one person/entity/one vote. Plaintiff points to no other persuasive independent authority other than the Elections Clause of the Delaware Constitution itself. And matters of policy are appropriately left to legislative bodies, not the courts.”
In other words, to put it in a somewhat less legalistic way: Tough cookies. The ACLU of Delaware had raised the claim — rather reasonably, all jokes aside — that allowing corporations to vote violated the principle of “one person, one vote” by diluting the votes of actual human beings. The ACLU noted that the number of corporate entities voting in 2024 was greater than the margin between the winner and the losing candidate with the most votes. The ACLU has already declared it will appeal to the Delaware Supreme Court, noting not only the precedent of allowing corporations to vote but the weakening of voting rights in light of the U.S. Supreme Court’s gutting of the federal Voting Rights Act.
Thus far, this court decision only applies to local elections in Delaware towns that allow corporate voting. But could this be applied more broadly? Given the completely one-sided, pro-corporate political preferences of the U.S. Supreme Court’s far right majority and the all-out assault on anything with the potential to limit even slightly the pursuit of the highest possible profit by Corporate America, led by the Trump administration, feeling angry about this ruling is reasonable. It is possible the Delaware high court will reverse, but holding one’s breath here would not be prudent because Delaware has long been a corporate haven. And here we are not talking about a few out-of-towners owning a small business or vacation home but rather most of the country’s biggest corporate behemoths.
Delaware has long been the United States’ very own in-house corporate haven, a compliment to offshore tax havens such as the Cayman Islands. How much of a haven? Nearly two-thirds of the companies listed in the Fortune 500 — those are the 500 biggest in the U.S. — are incorporated in Delaware. So cozy are these that a two-story office building in Wilmington, the state’s biggest city, is the legal address of 285,000 companies!
Yes, you read that number correctly. And not just small companies. Google, Apple, Walmart, American Airlines, J.P. Morgan Chase and Coca-Cola are among the corporations who use this building, the Corporation Trust Center at 1209 North Orange Street, as their legal address. These companies don’t actually do business at this location; it is essentially a mail drop-off point where lawsuits and legal documents are accepted. Interestingly, both Hillary Clinton and Donald Trump have entities registered to them that are domiciled in the building.
An Atlas Obscura report clarifies that it is Delaware law, very friendly to corporate interests, that is the draw:
“What draws companies to the Corporation Trust Center is not its drab, yellow brick exterior, but rather the Delaware General Corporation Law (DGCL). … The DGCL allows businesses based in other states to file their taxes in Delaware, whose unusually low corporate tax rate saves major corporations billions in taxes. The DGCL is so lucrative for big business that over 300 of the Fortune 500 are incorporated in Delaware. It’s so corporate friendly, in fact, that every year, 15% of all public corporations in the United States use the exact same building as their tax haven.”
There are more than 2 million corporate entities incorporated in Delaware, a state with a population of about 1 million. Harvard Business Services notes several reasons for why corporations choose to incorporate in Delaware: No corporate income tax on out-of-state revenue, no state sales tax, no personal income tax for non-residents and no inheritance tax. Nor does a corporation have to list its owners. Beyond that, Delaware has a special court, the Court of Chancery, to adjudicate business disputes. Judges decide cases there, not juries, and corporate litigants can avoid the regular trial courts. “Delaware is widely recognized as a corporate-friendly jurisdiction,” Harvard Business Services says, and there’s no argument there. And the Legislature is accommodating, too; when the Delaware Supreme Court handed down a ruling that many wealthy investors did not like, legislators quickly rushed through a bill that gives more power to controlling shareholders and insiders over ordinary shareholders.
It’s not as if corporations are headed elsewhere; 79 percent of U.S.-based initial public offerings listed Delaware as their home in 2022 and 81 percent did so in 2024.
As friendly as Delaware is, it is by no means the most corporate-friendly jurisdiction. As an offshore tax haven, few can compete with the Cayman Islands. There is a building in the Cayman Islands, Ugland House, where nearly 19,000 corporations have “subsidiary” offices. The Cayman Islands has a corporate tax rate of zero, but does impose taxes on imports, which hits the local residents as almost everything has to be imported. By having a subsidiary there, profits can be shifted there as if they were “earned” there and thus no taxes need be paid. A report by the U.S. Public Interest Research Group explained how this works:
“Ugland House is a modest five-story office building in the Cayman Islands, yet it is the registered address for 18,857 companies. … Simply by registering subsidiaries in the Cayman Islands, U.S. companies can use legal accounting gimmicks to make much of their U.S.-earned profits appear to be earned in the Caymans and pay no taxes on them. The vast majority of subsidiaries registered at Ugland House have no physical presence in the Caymans other than a post office box. About half of these companies have their billing address in the U.S., even while they are officially registered in the Caymans.”
Tens of billions dollars per year are lost to the U.S. treasury through use of these tax-dodging gimmicks. But, so far, multinational corporations don’t have votes. Of course, it could be pointed out that giant U.S. corporations don’t need to vote, given their vast resources, control of mass communication outlets, ability to hand large sums of money to public office holders and continual threats to move somewhere else, taking jobs with them, are more than sufficient to give them domination over the economy and political processes. But there’s that thought that doesn’t go away: Corporations are people. Mitt Romney isn’t the only person who thinks so. And that’s before we get to the likes of Elon Musk and other tech billionaires who would much prefer we do away with pesky elections and democracy altogether. Maybe someday only corporations will vote. Such a nightmarish fascist dystopia is not imminent, and won’t come to pass if there is enough organized pushback against the eroding of what democratic rights are left to us.
But if Delaware allowing corporate votes in local elections expands, and someday in the future corporations vote in state and national elections, how many votes would they get? Keep in mind how the corporate world values democracy in their internal board of directors elections: the more shares you own, the more votes you get. Will ExxonMobil get a few millions votes for president while we each get one? This sounds absurd now, but our corporate overlords, especially those from Silicon Valley, see democratic political systems as one more thing to break. Could the Delaware voting decision be a precedent? I’d like to say no, but taking that for granted might not be wise.
The post Delaware Says Corporations Really are People appeared first on CounterPunch.org.
This content originally appeared on CounterPunch.org and was authored by Pete Dolack.