A bill to increase some business fees in the state received a range of criticism from House republicans before advancing last week.
Gov. Matt Meyer’s proposed budget relies on new revenue from higher business formation fees and annual taxes, which mainly affect alternative entities like LLCs and LLPs.
House Minority Whip Jeffrey Spiegelman took issue with HB 400, arguing it asks for larger increases than the governor’s office requested.
The Secretary of State suggested increasing annual taxes on LLCs and LLPs from $300 to $350. But House Majority Leader Kerri Harris’ (D-Dover) bill ups that to $400.
Delaware's corporate franchise and its LLC fees are separate. But Spiegelman said states like Nevada will use HB 400 as an opportunity to push the "DExit" narrative. And Delaware will have to defend itself as a competitive place for business.
"When you actually have to explain that, you've lost the narrative," he said. "...This is a totally different thing. But if we think that Nevada and our other competitors are not going to link these two, fairly or unfairly, well, they are. They're going to do that."
Harris said Delaware's case law is what makes it competitive for incorporation.
"I'm not going to dig too much into our competitiveness," Harris said. "I don't want to assist our competitors with talking points."
Harris said changes made to the Secretary of State’s recommendations are a response to concerns about walk backs in federal funding. And the state needs to increase fees in order to remain responsive to its business' needs.
"When our small businesses ask for assistance for things that are happening beyond our control, whether in Washington or overseas, we have to be prepared to fill in those holes," she said. "And so creating a stable environment is a business friendly policy."
The proposed increases are expected to bring in an additional $142 million next year. And Rep. Bryan Shupe questioned how much of the Secretary of State's budget would benefit small businesses.
Harris said the state pays into multiple programs for education, transportation, healthcare, crop insurance assistance, and the Small Business Association that benefit local business.
The state has more than 1.5 million registered LLCs, as of 2024.
