Delaware’s Urgent Need for Responsible Governance and Pro-Business Reform
By: Jane Brady, Chair, A Better Delaware
The Delaware Economic and Financial Advisory Council (DEFAC) has reported that, in its estimation, the state will have less money next fiscal year – tens of millions less—than in this one. DEFAC reports to the Governor and the Legislature, particularly those representatives who comprise the committees that monitor and determine appropriations. The response has been panicked.
One immediate result has been a short-sighted and overdone knee jerk response. In a special session on Thursday, November 13, 2025, the legislature passed HB 255, a bill that would “decouple” our tax structure from that of the federal government. Previously, our tax code provisions regarding depreciation were identical to those of the federal tax code. This provided ease in calculating not only the total tax burden a company would face, but also the advisability of expanding a business or purchasing new equipment. As Brian DiSabatino, Chairman of the Delaware Business Roundtable has stated, “Our long-standing rolling conformity to the federal tax code simplifies compliance and reinforces our hard-earned reputation for stability and predictability…. HB 255 would raise the cost of capital investment and innovation in Delaware. This happens precisely when we are intensely competing for high-value manufacturing and life sciences projects.”
And this is not the first, or only, imposition Delaware government has made on business that acts to discourage businesses from locating here or expanding. Our corporate tax rate is the highest in the nation, and our personal tax burdens are extremely costly. Income taxes, hidden taxes, excise fees and other transaction costs to our citizens ranks Delaware 7th in the nation in the tax burden state government imposes on individuals.
Our regulatory burden on businesses is also extremely costly. Recent, additional building code requirements, alone, will add thousands of dollars to the cost of homes – right at a time when the Legislature and Governor are claiming a crisis and calling for an increase in affordable housing.
The Legislature created a committee of political appointees to review hospital budgets and make changes as the committee believes appropriate. Many wonder, “Who is next?” Anyone who does business with the state government is concerned – are contractors who build the roads or schools going to be asked to open their books and undergo scrutiny by people who have never run an air hammer or backhoe?
These decisions by our legislature have consequences for all of us. Wallet Hub, in a June 2025 report, ranked Delaware 43rd in economic health among the 50 states.
There are solutions. One clear choice would be to do what each of us does when we see a shortfall coming – we plan ahead and cut back on luxuries, such as eating out, buying brand name items rather than store brand, and choosing hamburger rather than steak. That choice, while clear to all of us, has historically escaped legislative action. Rather, the decisions have been to increase taxes (some, promised to be temporary, are still around a dozen years and several budget surpluses later) or to add fees to transactions with the State, such as vehicle inspections.
We have repeatedly urged that Delaware eliminate the Gross Receipts Tax, an “invisible” sales tax (because you don’t see it itemized in the costs you pay) that burdens poorer consumers and small businesses particularly hard. This tax, that is required on every sale of goods or services an entrepreneur or business makes, hides behind the sign at the state line that says, “Tax Free Shopping.” It infringes on the ability of businesses to expand and thrive. At a time when Delaware is seeking to bring precious manufacturing and medical research businesses to the state, we should be focused on what we can do to help businesses get a foothold and grow.
And Delaware’s economy still struggles to grow. While our Gross Domestic Product has improved since it was at 0%, it still lags, even when compared to our closest neighbors. Our tax and regulatory policies do not encourage growth and business development. We are at risk of losing our standing as the “Incorporation Capital of the World,” because we continue to make the business environment challenging for any business seeking to locate here, grow or just succeed.
It is time that Delaware took a broad and careful review of where we are getting the funds to support Delaware government and how we are choosing to spend those funds. A list of priorities should be established. Be honest with the citizens of our State as to the objectives our Legislature chooses to put first, second and so on. Let us vote for those whose priorities we share.
The Delaware Department of Revenue expects us to not only live on what we make, but also to pay what they impose on us in taxes each year. We should expect no less from our legislators. We are expected to plan ahead, live within our budget, and we don’t get to choose if we get a raise, when and how much it will be. Sound fiscal management is expected of us every day. We should expect no less of those we elect.
Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.