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Comment by ElProlactin | Hacker News Reader

> ...a specifically crafted loophole that over half the Fortune 500 can fit through.

There is no "loophole".

It is perfectly legitimate for a company to be incorporated in Delaware and to register as a foreign corporation in other states where it has a presence/does business. You can pick any random Fortune 500 company and look up its registrations in the states where it does business.

This is not remotely similar to setting up a shell LLC in Montana, purchasing a vehicle through it in Montana to avoid sales tax in another state, registering it in Montana and then physically moving it to another state without changing the registration and paying the use tax as required by law in that state.

The crime here is not about setting up a Montana LLC. Nothing about the Montana LLC made this car tax evasion scheme even arguably legal.

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> It is perfectly legitimate for a company to be incorporated in Delaware and to register as a foreign corporation in other states where it has a presence/does business. You can pick any random Fortune 500 company and look up its registrations in the states where it does business.

It may be legal, but it's rather more questionable if it's legitimate: the latter is a value statement in casual language, even if legal jargon would be more precise.

If I do business with people in all states of the USA*, there should not be any particular state which attracts a majority of big (and everything bigger than "small") business registrations: other than network effects (e.g. everyone else does it so the corporate lawyers are all right there), anything pushing so many businesses to choose one specific state, be that for taxation or for a court system that presumes more in favour of businesses than elsewhere, this creates an uneven playing field for other states and who gets what powers of enforcement for business (/consumer) laws they pass.

Like, people here argue the EU is "anti-business": well, the American-registered factories (Tesla) and American-owned IT company offices (Apple, Microsoft, Google, etc.) are still here, and the shares are publicly traded so even us Europeans can own them, but they count as "American" because of where they (/their parent companies) are registered. Even Google Deep Mind (HQ: London) gets called "American" due to the ownership structure.

* A similar argument applies to the EU

I don't have time to go into a long-winded explanation of why so many corporations are set up in Delaware (there's plenty of information online about this) but I want to address this point:

> this creates an uneven playing field for other states and who gets what powers of enforcement for business (/consumer) laws they pass.

Setting up your company in Delaware does not mean that you are exempt from the business and consumer protection laws in other states.

If you're a Delaware company and you violate consumer protection laws in California, violate environmental protection laws in Colorado, defraud investors in Maryland, etc., the relevant authorities/powers in those states will all be able to exercise jurisdiction over you.

Being incorporated in Delaware does not mean you have free reign to do whatever you want in any other state and have disputes over your actions adjudicated in Delaware.

I feel like the law should differentiate a rich person doing this with many luxury cars versus me with one car who maybe in a few years needs to move across states.

For example, if I own a 2014 Nissan Versa and I register it in Colorado in January 2020 and then I need to move to Texas in August, I won't get Texas plates immediately when I get to Texas. I've "paid up" in Colorado for as long as my tags are good. I shouldn't have to get a Texas license plate until my existing one expires. However, I will eventually get Texas tags, just a few months too late.

Also I don't mind people going to Montana and buying luxury cars there if the cars actually stay in Montana. However, there should be scrutiny on these expensive toys more than regular cars we need to live because we don't have a decent transit story.

I feel like intent and magnitude should play a big role in legislation.

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