State Report DE 2: The First State Report

The First State Report

by William A. Shields

(See also Delaware Report #1.)

Nearly two years ago I told a few politically active friends of mine about an idea I had called The Delaware Plan. The plan was similar to the Free State Project, but I never considered that the plan would work in any state except Delaware. I am still convinced (although willing to be persuaded otherwise) that Delaware is the only state that will work for FSP purposes.

Having lived in Delaware almost all of my life, and having chaired a political party here (Reform/Buchanan), I'm as close to the action as it gets. I am delighted to be able to help the Free State Project by making this report, and I truly hope it helps our members and supporters make an informed choice. If you do not agree with any of my premises, please fire off an email to me at wshields@comcast.net. Like I said, I'm willing to be persuaded.

Political realities

Delaware is one of the easiest states in which to gain ballot access. The Libertarian Party has had ballot access and will surely maintain it easily. All that is needed is a low number of registered party members and a form filed with the Secretary of State. 240 Reform Party members got us on the ballot in 2000. Please keep in mind that easy ballot access helps libertarians by enabling other parties like Greens (tree huggers), Natural Law (rug pilots), and others, to siphon votes from the two big-government parties that I need not mention by name.

It's as easy as one, two, three

A primary strategy that I have seen mentioned is to take over county governments. The number of counties in Delaware is three (3). It doesn't get any easier than that. As far as local (municipal/town) offices go, only two – Wilmington and Elsmere – have partisan party elections. This means you needn't have political party backing to get on the ballot. This makes almost all local offices ripe for stealth campaigns if a candidate is so inclined. Want to be Mayor of a State Capitol (Dover)? Put your name on the ballot and hit the campaign trail.

Here are the statewide voting totals for the 2000 election cycle. This represents the number of actual votes cast, broken down by party and the percentage of registered voters that number represents

Democrats	145,829 (68%)
Republicans	117,595 (69%)
All Others	69,629 (59%)

To crunch all of Delaware's election numbers for the Y2K cycle go to www.state.de.us/election/reports/agp2000.htm#STATEWIDE

As has been pointed out elsewhere, Delaware's voting population numbers are among the lowest of states being considered, and the only state that yields a low voter population and a livability factor you will find in no other state with similar numbers.

Area

Yes folks, size does matter, so let's talk about it. If a political activist in Delaware has to travel to a meeting anywhere in the state, he or she has a trip of 100 miles or less to make. One can make a trip from anywhere in Delaware to the State Capitol (Dover), conduct a two-hour business meeting, and still be home in time to watch TV. Let's face it, if we are going to organize and mobilize liberty in our chosen state, we can do it more easily and more cheaply in Delaware. Other states' vast wilderness areas may sound attractive to some, and may look good on a post card, but a two-day dog sled run that yields four signatures on a petition is not my idea of a workable organizing plan. You can almost measure Delaware with a ruler, so here are the numbers:

Delaware ranks 49th in the nation with a total area of 1,982 square miles.
Delaware is 96 miles long and varies from 9 to 35 miles in width.
New Castle County is 438 square miles.
Kent County is 594 square miles.
Sussex County is 950 square miles.

Delaware has a unique and important role in our nation's economy

Want us to be able to negotiate with the federal government from a position of real power? Consider: nearly every Fortune 500 company is headquartered in Delaware, as is nearly the entire credit card industry. Nearly all U.S. flagged oil super tankers such as the infamous Exxon Valdez are home ported in Wilmington, Delaware. The reason for this is the Chancery Court of Delaware – which is fast, predictable, and very pro-business. A political party that takes over Delaware gains a small piece of the geographical pie, but a huge slice of the American economy. I promise you, should this happen (FSP) in Delaware you will get the Feds' undivided attention. I'm not sure if this is good or bad, but it's either really good or really bad. (Now that I think of it, you couldn't write a movie script this interesting. All rights reserved.)

There is no sales tax in Delaware which is why there are numerous shopping malls strategically located to draw retail dollars from neighboring states. The Christiana Mall, for instance, is located on I-95, equi-distant from New Jersey (via the Delaware Memorial Bridge) and Elkton Maryland (to the southwest). The retail industry is huge in Delaware and it provides many jobs for entry-level types and semi-retired seniors. Help wanted signs are posted everywhere, although most are for low-paying retail and fast-food jobs. Still, one fact cannot be denied: tax freedom along with a strategic location amidst population centers goes a long way toward achieving economic prosperity.

The job market in Delaware is favorable compared to the other states being considered. The chemical, banking, and pharmaceutical industries are thriving with no signs of a downturn, despite the presently dismal stock market condition. I'll not go into too much detail here as Delaware's superior job market, as compared to other FSP candidate states, has been established elsewhere.

Location, location, location

On the eastern seaboard of the United States, Delaware is bordered by the Atlantic Ocean and Delaware Bay, as well as by the states of New Jersey, Pennsylvania, and Maryland. Delaware's location affords easy access to the major metropolitan areas of the northeast. Washington, D.C., Philadelphia, and Baltimore are all within a 2-hour drive. According to legend, Thomas Jefferson described Delaware as a "jewel" among states due to its strategic location on the eastern seaboard. Hence, a sometimes used nickname, the Diamond State.

The Port of Wilmington, Delaware is number one in the nation for imports of meat, frozen juice concentrates, and fresh fruit.

Taxes and retirees

Invest or Retire in Delaware?

Property taxes: Delaware's property taxes are among the lowest of any state, ranking 43rd in the nation.

Retirement: The following table shows the total annual sales, property, and income tax bill for a retired couple living in Delaware and surrounding states. The couple is assumed to have $50,000 of annual income and live in a home worth the median market value of 2,000 square-foot houses in their town.

State	Rank	Sales Tax	Property Tax	Income Tax	TOTAL
Delaware	#2	$0	$1,350	$790	$2,140
	23	$2,268	$2,250	$560	$5,078
New York	43	$3,025	$3,086	$446	$7,279
Maryland	45	$1,968	$4,975	$520	$7,363
New Jersey	49	$2,268	$4,945	$342	$7,555

Housing: Average price for existing three-bedroom house: $80-150,000 and up. Mobile homes $25,000 and up.

Personal income tax: State personal income taxes for residents are assessed on Delaware taxable income. Delaware taxable income equals Delaware adjusted gross income minus personal exemptions and standard or itemized deductions. Delaware adjusted gross income is derived by adding to the Federal adjusted gross income and receipts from the securities of states or political subdivisions other than Delaware and its political subdivisions. Income from obligations of the United States, disability and/or elderly credits and pensions up to $3,000 (age 60 and over) is then deducted from the federal adjusted gross income. Nonresidents are taxed on the portion of income derived from sources within Delaware. The current state tax rate schedule is graduated and includes six rate reductions.

State taxes: Delaware has reduced its personal income taxes at all income levels. The state has never had a general sales tax or an inventory tax. There are no state real property taxes, and the local real property taxes are very low. The total state and local tax burden is competitive with most other states.

County taxes: Sussex County taxes are based on a 1974 appraisal and assessed at 50 percent of the 1974 market value. The county tax rate for the year is $0.445 per $100 of assessed property value. This is the eighth year that the rate has been $0.445. This tax includes the county's cost for general obligation bonds, libraries, paramedics, and the general operation of the county.

City and town taxes: Municipal governments and school districts are financed in part through real property tax receipts. Real estate in incorporated areas is subject to local property taxes, school district property taxes, and vocational school taxes. The total property tax burden depends on the tax rate, the property assessment, and the assessment ratio.

Delaware always ranks high with publications catering to retirees. The primary reason is the low tax burden. Consider this from CNBC: moneycentral.msn.com/articles/retire/basics/9838.asp

The winners …

Okay, we won't keep you in suspense any longer. It's no secret that corporations love to set up shop in tax-friendly Delaware. Now retirees might want to do the same. Our hypothetical retired couple in Dover, Delaware doesn't spend a dime on sales taxes (there are none). Social Security benefits are spared the state levy, and up to $12,500 per person of other retirement income is tax-free. Our couple's only tax obligation is a $543 property-tax bill on their $133,000 home, making the First State first on our list of tax-friendly locations for retirees.

Next on the list is Alaska, but it's a distant second – literally. Although Alaska has no state income tax or sales tax, and the capitol city of Juneau waives its 5% local sales tax for residents 65 and older, housing prices have skyrocketed recently and so have property taxes. The median sale price of a 2,000 square-foot home in Juneau last year was $240,000. Most residents would owe more than $2,700 in property taxes, and even with a $150,000 exclusion for senior citizens, our retired couple owes $1,032.

Other FSP candidate states ranked at the very bottom of this list (check the site for yourself).

Better living through chemistry

When the Du Pont family arrived in Delaware in 1799, they saw potential power in the flow of the Brandywine Creek. They turned their vision into a chemical empire that survives today. Now it is time for the Free State Project members to notice Delaware's special chemistry in the numbers that speak volumes about Delaware's viability for our noble purpose. You don't need a degree in chemical engineering to figure this one out.

Among the states being considered by the FSP, Delaware has a small number of voters, combined with an acceptable livability rating, taking into consideration the relatively moderate climate, and the favorable economic outlook.

Granted, if Delaware is chosen by the FSP, I won't have to move. And, my sister would love to add 20,000 names to her real estate business Rolodex. However, I want the FSP to work as envisioned, and not fail.

Delaware will give us our best chance.

December 11, 2002

The views expressed in this article do not necessarily represent those of the Free State Project, its Officers, or Directors.