It is a fact that everyone on Earth knows deep in their bones: Delaware sucks. It is an empty, soulless drive-thru state, a patch of land all right-thinking individuals merely pass through on their way to another, better state. “Oh, I guess we were in Delaware the last half hour” is the state motto. But there’s an under-examined aspect of its deep shittiness: its terrible corporate secrecy laws, which allow all manor of rich bastard to hide their nefarious schemes.
OK, it’s not fair for me to put all the blame on Delaware. Two other states, Nevada and Wyoming, also have laws that allow corporations to operate in the dark, although Delaware’s laws allow the greatest degree of secrecy of all 50 states—which, coupled with its very low tax rates for businesses, is why the state has more corporations than human residents. Delaware doesn’t require corporations to list their actual owners or shareholders, meaning many corporate records will show only the name of an incorporation firm (a corporation that exists to incorporate other businesses anonymously). That’s how one single building in Wilmington became the legal home to more than 285,000 businesses.
Why does corporate secrecy matter? The New York Times has a good report out today examining one very important reason: Sean Hannity and people like him. It was reported last week that Hannity, in addition to being a bloated fascist, is the landlord for 877 residential units—and he’s jacked up the rent massively since buying those properties. Like Hannity, an increasing number of landlords are hiding themselves behind limited liability corporations (LLCs) so they don’t have to disclose their identities. Per the Times:
LLCs shield property owners from personal liability while obscuring their identities. But so much anonymity also enables money laundering, and it can mean that tenants struggle to hold landlords accountable, that cities fail to fix blight and that researchers can’t answer basic questions about the housing market.
In expensive cities like New York and Miami, LLCs have helped foreign investors launder money through luxury condo purchases. In poorer cities like Memphis and Milwaukee, they have enabled investors to walk away from vacant properties and tax bills.
For renters, or tenants mired in rent-to-own contracts, these entities mean they often don’t know who they’re dealing with — or who’s evicting them.
While Hannity has amassed a large real estate portfolio through his 20 shell companies, most people’s shitty landlords aren’t famous Fox News hosts and won’t draw the same level of reporting scrutiny. But that doesn’t mean those renters have any less of a right to know who owns their houses and who’s ultimately responsible when the pipes burst or the ceiling caves in. As the Times points out, that’s becoming increasingly difficult: The number of properties owned by individuals (meaning people, you know, with names) dropped from 92 percent in 1991 to 74 percent in 2015, “driven largely by the growth of LLCs.”
Anonymous LLCs also allow big political donors to give more money than you’ll earn in your life to causes of their choosing without anyone knowing who they are. Does that seem fine? It does not seem fine, to me. It seems very clear that, in the United States, it should not be legal to form a corporation and keep your identity completely hidden and then use that corporation to secretly donate to political efforts, or buy buildings and jack up the rent, or pay off porn stars, which is how Donald Trump’s personal attorney, Michael Cohen, paid Stormy Daniels.
Delaware’s politicians are incredibly reluctant to change this ridiculous situation; business incorporation fees are the state’s second largest source of revenue and account for up to a quarter of the state’s income. It will take a massive political effort, in Delaware and other states, to change this situation, which serves only to benefit the rich and the evil. In the meantime: Man, fuck you, Delaware.