Salon: How Delaware became an American haven for "grand corruption"

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"According to the Institute on Taxation and Economic Policy, the cherry on this tax-reduction sundae is that Toys R US can, in turn, take the royalty payment as a deductible business expense off their state tax returns. In 1990, Geoffrey LLC received $55 million in royalty income, “and Toys R US was able to avoid an estimated $2.75 million in state taxes as a result of this strategy,” according to ITEP’s analysis. A study of 2,500 Delaware registered corporations between the years 1995 and 2009 showed that the entities reduced their state tax liabilities by anywhere between 15 to 24 percent. Published estimates from a few years back indicated the “Delaware loophole” cost her sister states close to $10 billion in lost revenue."

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