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by Christine Mann
A tiny state, Delaware, has a major impact on politics. Is it a good one? It is highly corrupting.
Living thousands of miles away, in San Diego, California, I was confounded by the number of San Diego projects that were organized as Delaware LLCs [limited liability corporations]. Everything from local water treatment plants to redevelopment projects were all Delaware corporations. I soon discovered it wasn’t just San Diego; it was the entire state of California that was organizing government projects as Delaware-based LLCs.
In fact, just Google “Redevelopment, California, Delaware LLC” and you will see an endless list of official pdf documents of state redevelopment projects -- which are paid for with your state tax dollars -- registered as Delaware LLCs.
The entire state of Delaware is tiny: 30 miles wide and 96 miles long. Yet it boasts 63% of Fortune 500 companies and 50% of US companies.
Why does corporate America love Delaware so much?
Delaware companies are more secretive than Swiss bank accounts in their loophole potentials. The tiny state gives owners and investors in corporations unprecedented power to hide their wealth and their individual identities through its secretive legal methods.
The Guardian confirmed that Delaware trumps Switzerland as the leading tax haven in the world. “London, Luxembourg and Zurich are in the top five most secretive jurisdictions, according the first comprehensive index of financial transparency ever compiled. Yet top of the pile, beating the British Virgin Islands, Belize or Liechtenstein as the best place to hide wealth, is Delaware....One of the smallest states in the US, it offers the best protection for anyone who does not want to disclose their identity as a beneficial owner of a company. That is one very good reason why the East Coast state hosts 50% of the US’s quoted firms and 650,000 companies – almost equivalent to one company per Delaware resident.”
This is why the Delaware LLCis the dirty little secret of corporate America and US politicians. They do deals with your tax money that generate profits that they do not want you to know about. It’s the giant loophole that allows politicians to say they do not have any financial conflicts of interest – even as they vote on government contracts in which they themselves arer investors! Because of the Delaware LLC, they are able to do this with legal protection and in total secrecy.
Even Stephen Colbert made fun of this outlandish situation . While that is satire, the truth is just as crazy: the Delaware LLC provides a legal means of laundering money. It also effectively lets the private sector bribe politicians – and lets politicians bribe corporations, who in turn support their campaigns -- by allowing a private company to form an anonymous shell corporation that in turn can hide individual investors.
Thus, a special interest group could form a Delaware corporation and then make politicians or government officials partners in that corporation -- allowing them to profit from their positions of power. Taxpayers would never know that their Congressional leaders are also investors in companies that are funded with their own tax dollars and that may or may not be in their interests -- because of the unprecedented secrecy allowed by this type of arrangement.
The implications of this are profound. It essentially means that campaign limits are meaningless, because with a wink and a nudge, companies can make a politician a beneficiary of millions of dollars. No one need be the wiser. The Delaware LLC is the financial substructure for the oligarchy that our country has, otherwise mysteriously, become. Why are our emails to our elected representatives suddenly falling on such deaf ears? Why should our representatives listen to what we want – when special interests can simply suction our tax dollars in government-funded programs., and circle around to secretively benefit our Congresspeople personally?
Our leaders are getting measurably richer recently. How did that happen? Today,47% of Congress Members are millionaires, according to government watchdog OpenSecrets, In 2010, the estimated median net worth of a current U.S. senator stood at an average of $2.56 million. Sarah Palin appears to have purchased a home in Arizona -- using a Delaware LLC -- as reported here in the Daily Beast.: “The Arizona Republic, which broke the Palin property news, reported that Safari Investments LLC, a Delaware-based limited liability firm formed the day before the deal closed on May 12, paid $1.695 million cash for the home. Delaware doesn’t require names to be listed on the filing, allowing the owners to maintain privacy. Still,The Alaska Dispatch noted that the Palins’ vacation home in Alaska is on Safari Lake.
“Reached by The Daily Beast and asked whether the home belongs to the Palins, Phoenix-based attorney Alan Kierman, listed as the contact for Safari Investments, said he could not comment.”
If we really want to change the system to take back our representative democracy, this reform should come first. We need to demand an end to these powerful tools --- specifically, the Delaware LLC -- that allow Wall Street to conceal the transfer of vast amounts of wealth to members of Congress, and vice versa, with complete impunity -- and no public exposure.
:: image courtesy of Wikipedia via Creative Commons license ::
Christine Mann has a Master's degree in Architecture and is currently a candidate for NCARB licensure. She is an avid environmentalist and bleeding heart Libertarian and interested in real solutions that solve problems and empower people.