Smyrna times., 1933-01-11
LAW
ON CORPORATIONS
Delaware's Revenues Would
Be Cut in Half If Act
Is Passed
TO STANDARDIZE LAWS

Delaware stands in danger Of
having its total revenue cut in half
by the Democratic United States
Congress which will convene this
Spring. a move is under way and
gaining rapid momentum il Wash
ington to have the next Congress
pass a law which would standard
ize the incorporation laws of all
the states for all companies doing
interstate business. Dalaware's
liberal charter laws, which have
been subject to attack from sever
al quarters, have long been one of
the States principal sources Of in
come and have figured vitally il
keeping the real estate and income
taxes comparatively low. The
charter business provides up to so
per cent Of Delaware's current rev
enue, Secretary Of State Charles H
GrantIand said last week. If the
proposed measure goes through the
new Congress, and it is learned on
excellent authority it is strongly
favored by the incoming admins
tration, it will have an effect un-
precedented in American history
that of destroying at one blow the
source Of half of a States revenue.
r State officials and corporation at
torneys are agreed the result in
Delaware would be chaotic. As one
State official said last week, 1T
would play the devil with the real
estate taxes. Income taxes would
not come near making up the loss"
, Inasmuch as the States entire
fiscal machinery is geared to the
revenue from the charter business,
it would probably be necessary to
: reconstruct the entire system of
public receipts to meet the emerg-
encies. There is no way" Secre-
tary Grantland said, that Della
ware could derive as much return
, outside of taxes as from the chart
er business" If the proposed mea-
sure becomes law, increased taxa
! ton in Delaware would be newt
, able. Corporation attorneys who
! are thoroughly familiar with the
! States charter laws and their re-
] lation To the budget, are frankly
I worried about the situation. Pre-
parations are being made to COM
bat the move, but political leaders
, feel it is to the best interests of
Y the State to let the matter rest for
i, the present Just what lines of ac-
. ton win be possible when the time
! comes to strike back cannot be
! clearly determined now A more
I immediate problem, it is pointed
out, is the concerted attempt Of
!, neighboring States to Appropriate to
! themselves some of Delaware s
] charter business by passing laws in
1 their respective Legislatures, mod
flying their own existing charter
laws. Maryland has been driving
in this direction for two years and
I now Pennsylvania has taken up tha
idea. Secretary Grantland's com
ment on the situation was this:
I'VE are doing everything in our
power and will continue to dc
everything in our power to protect
\ the best interests Of the State
So far, there has been no move to
provide additional revenue in case
n the States charter business is sud
denly curtailed or stopped. ''Ws
VIII meet that issue when the time
comes" Secretary Grantland said
The Congress would not be consti-
tutionally empowered to standard
= ize all the incorporation laws, but
by the clause which provides that
Congress shall be empowered tC
regulate commerce between the
several States, it is generally felt
Congress would be able to stand
ardize all charters of companies
doing interstate business. Such
charters, Secretary Grantland
pointed out, constitute 80 per cent
Of the States charter business
Under the depression, the State
!. revenue from charters has become
i increasingly important and has
I been the envy Of several other
states. While other sources 81
7 revenue, such as taxation, have de-
] creased. the charter revenue has
|. held its ground exceptionally well
4 particularly in view Of the rise II
/ money value. One hope for Della
/ ware, in the event Of a law a.
e drastic as the one now being urged
Is that companies would flock e
r the State in a rush to incorporate
y under the Delaware laws before
\ the Federal act could become oper'
/ ative. This would furnish increas-
I ed revenue for a time, just wher
q the state needs it most.
/ LEWES HAS TOWN ELECTION