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The Tiny Building Where 285,000 Businesses are Based

The Tiny Building Where 285,000 Businesses are Based


This video was made possible by Skillshare. Learn from more than 25,000 classes for free
for two months by signing up at skl.sh/hai26. There are a few things that everybody hates. Bug bites, going to the dentist, watching
videos that aren’t made by HAI and other Wendover Productions associated entities,
hand dryers, running out of things to put in a list, and of course, paying taxes. Of course there are a lot of different opinions
on taxes overall, but most seem to agree that they don’t like paying taxes themselves,
and nobody hates taxes more than corporations. That’s why often, corporations store their
money in tax havens—places with loose, generous tax laws that charge either very little, or
no taxes. Tax havens are like buy-one-get-one-free ice
creams, except instead of buying an ice cream, you put all your money in an overseas bank
account, and instead of getting a free ice cream, you don’t pay any taxes on your overseas
money. So actually, I guess it’s not like buy-one-get-one-free
ice cream at all and I should work on my metaphors. When you think of tax havens, you probably
think of places like the Cayman Islands, which doesn’t tax corporate or personal income,
or Bermuda, which also doesn’t tax corporate or personal income, but not many people think
of Delaware—a small, mid-Atlantic state with a population of 967,000 that’s home
to plenty of old historical artifacts like the New Castle Courthouse or former Vice President
Joe Biden. In fact, most people don’t really think
of Delaware much at all—it’s only home to 0.3% of the US population. Sorry Delaware-eites….um… Delawarriors…Delawalruses….people from
Delaware. Yet, Delaware is the legal home to over 65%
of all Fortune 500 companies, and 80% of publicly traded US companies. In fact, Delaware is home to more companies
than people. Now, this could either be because of the state’s
very respectable 1 to 138,000 IHOP to resident ratio or because of Delaware’s extremely
lax tax laws. First of all, in Delaware, companies don’t
have to pay corporate income tax on money that’s made outside of the state, and income
from interest and other investment isn’t taxed either, but mainly, Delaware is so advantageous
financially because of what’s called the, “Delaware Loophole,” which takes advantage
of the fact that Delaware doesn’t tax what are called “intangible assets.” Intangible assets are things that exist and
have value, but aren’t physical objects, like trademarks, copyrights, or my sense of
humor—there may not be much physical evidence of these things, but I promise you they have
value. So let’s say, as a hypothetical, I start
a corporation called, “Giraffe as Interesting.” We sell giraffes, this is our logo, and our
motto is, “our expert staff will get you a giraffe super fast.” Let’s say that we have giraffe stores all
across the country—in California, Pennsylvania, North Dakota, South Dakota, East Dakota, West
Dakota, Northwest Dakota, North-northwest Dakota, East-northwest Dakota, and of course,
Florida. Now, let’s say that my giraffe store in
Pennsylvania is raking in money—normally, all that money that store makes would be subject
to Pennsylvania taxes, but instead, I create a subsidiary of Giraffe as Interesting that’s
located in Delaware, and I transfer some “intangible assets” to that subsidiary. So I give the ownership of the name Giraffe
as Interesting, our logo, and our motto, to the Delaware subsidiary. Now, my store in Pennsylvania will pay my
Delaware subsidiary a trademark fee to use the name and logo and slogan. So let’s say that my Pennsylvania store
sold $100,000 worth of giraffes, but they also paid $95,000 to my Delaware subsidiary
for the rights to use the name Giraffe as Interesting and this awesome logo and that
great motto. My Pennsylvania store can deduct the money
they paid to my Delaware subsidiary from their income, so now they only have to pay Pennsylvania
taxes on $5,000, not $100,000, and that $95,000 they paid to my Delaware subsidiary doesn’t
get taxed at all, because, again, in Delaware, they don’t tax what’s considered, “intangible
property.” Every year, the government loses out on about
$9.5 billion because of the Delaware loophole. That’s enough money to buy 392,000 giraffes
or a few dozen US senators. So that’s the Delaware loophole and that
is what brings us to what you’ve all been waiting for—the two-story building that’s
home to 15% of all US companies. Now, there are a lot of important addresses
in the world: 1600 Pennsylvania Avenue, 10 Downing Street, 4 Privet Drive, 42 Wallaby
Way, but perhaps the most exciting of them all is 1209 Orange Street, Wilmington, Delaware. Believe it or not, this shabby building is
the legal address of over 285,000 companies. Why are they all in the same building? Because you have to have an address in the
state for, “service of process”—in other words, a place to get mail and legal documents
if you’re legally based there, but that law doesn’t say that you have to have staff
there. So a company, the CT Corporation, bought this
building at 1209 Orange Street and said, “hey companies, if you want, you can list this
as your address and get your mail here and we’ll deal with it so you don’t have to.” Therefore, 285,000 companies said, “yep,
cheerio, that sounds great,” which is how we ended up with Apple, Google, Walmart, American
Airlines, and Coca-Cola, all in the same two-story office space that looks like the headquarters
for an imaginary superhero called “boring-man,” whose superpower is coloring things beige. Now, let’s say you want to pay fewer taxes. You could a—declare your body a temple thereby
qualifying it for the religious institution tax exemption or b—learn how to properly
identify business expenses. For option b you could a—spend a captivating
afternoon reading through the IRS’ fantastic archive of documents or b—spend an actually
captivating 40 minutes taking this Skillshare course teaching you to do exactly that. It could end up being the most profitable
40 minutes of your life. If you really want to round out your afternoon,
I’d also recommend taking Thomas Frank’s productivity masterclass which can help make
everything you do more efficient. If you want to learn new skills and better
yourself, Skillshare is the place for you especially given their enormous library of
over 25,000 classes. If you sign up at skl.sh/hai26, you will get
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to less than $10 a month.

Comments (100)

  1. Want to evade some taxes? Well, guess what, if you’re given a free HAI t-shirt, which has (a very limited amount) of value, it qualifies as a gift and therefore you don’t have to pay taxes on it! Then you can just go sell it and then bam, free money. (My lawyer asked me to include a message saying that this is not legal advice, is not true, and that you should never take advice, legal or otherwise, from me.)

    How do you get a free HAI t-shirt? Glad you asked. Just submit a topic suggestion for HAI here and then, if we use it, you’ll get that free t-shirt shipped to wherever you are: https://docs.google.com/forms/d/e/1FAIpQLSfUdlvw6YgU44J8AnM2U_ZvRMyvh_CUM51LYSqF5nYJB9d1-w/viewform?usp=sf_link

  2. "This video was made possible by Skill-"
    Ah shit, here we go again….

  3. 5:03 The Infinity Stones

  4. Someone likes Dakota

  5. HAI:Yay another airplane free video!!
    Also HAI:just kidding

  6. Giraffe as interesting ™

  7. Okay he's definitely trollin' us with the airplanes lol

  8. So forget New York, Delaware is the place where international terrorists want to hit.

  9. Also hating Wendover.

  10. Who knew giraffe stores are that lucrative?!

  11. "In fact, most people don't really think of Delaware much at all — it's only home to 0.3% of the US population." In fact, most Americans don't really think of the world outside the USA much at all — it's only home to 95.8% of the world population.

  12. Up till now, there were 767 comments

    Then i added one

  13. 42 wallaby way isn't in the us, it's in australia

  14. For the record, similes are a type of metaphor!

  15. I declare my body a temple!

  16. Why the fuck hasn't this loophole been fixed? Oh yeah because the US is a corporatocracy.

  17. Please tell me I’m not the first one to notice that was Captain America not Joe Biden

  18. HAI > Wendover.
    Don't @ me.

  19. Our expert staff will get you a giraffe super fast.

  20. At 3:50 you say that it's a two-story building but according to Wikipedia and the number of windows, it is a single-story building. So I guess you can add this one to your list of corrections for very important mistakes.

    https://en.wikipedia.org/wiki/Corporation_Trust_Center_(CT_Corporation)

  21. This is probably the morning st recognition that weve ever got.

  22. The reason why most companies are incorporated in Delaware is largely due to their corporate law and chancery court rather than taxes

  23. 1:15 yeah thats Joe Biden alright HAHAHAHAHAHA

  24. This is why the social welfare in the us is fucked.

  25. "Let us be grateful for the fact that there are still such things as those the honorable gentleman calls loopholes. Thanks to these loopholes this country is still a free country" — Ludwig von Mises

  26. No trains? Unsubscribed

  27. For related reasons, the tiny village of Nürburg, Germany, has about thirty dwellings and a few thousand declared residents…

  28. with such giraffe i wouldn't need a wife

  29. As much as I love your videos on this channel and wendover and the content you provide, I think you should work on your cadence and flow of sentences. You sound like a high school student reading from a textbook. not trying to be mean, just suggesting you could improve in that area.
    From a fan who's been watching your videos since 2016

  30. I low key want a religious tax exempt status

  31. That sure was a lot of Dakotas. Good video. I had no idea that the Delaware loophole was a thing. It's just crazy how much debt the country has and yet we offer so many tax breaks and loopholes to those with the most money.

  32. This is disgusting. Americans, you have to do something! The corporations are not paying their taxes but citizens have to pay a lot! This is not fair!

  33. Did people not realise that that it was Captain America at 1:16?

  34. Can it be guillotine time yet?

  35. the humor ruined the video, kinda annoying and not funny

  36. “Or a few dozen US senators “ 😂😂😂😂

  37. Why does the US government let this happen?

  38. As a North Dakotan that dakota bit was great.

    As a cartographer I take issue with your map projections 😰

    Please use UTM or LCC basemaps for stuff.

  39. Why are there so many dakotas?

  40. Americans live in a socialist country. It's just for the corporations though, and they give nothing back. So corporations are literally leeching off the potential well being of the people. US government prioritizes the relationship with corporate donors over the health of it's people. You cant even get a guaranteed ambulence for free if you are injured, while big corporations literally gave a pass to break the law and scam consumers for nothing

  41. The Delaware loophole vs. God’s loophole?
    Which is better?
    In both cases people are taking it in the A$$.

  42. This comment is brought to you by Skillshare.

  43. How the fuck is this legal?????

  44. "or a couple US senators" gold

  45. The Fair Tax. Go look it up.

  46. Why do they have so much IHOP’s?

  47. Good thing Facebook is dead now.
    The only people that still use Facebook are moms and old virgin dudes

  48. I just think of Wayne's World.

    Hi… I'm in Delaware.

  49. Wow! There sure are a lot of Dakotas.
    1…2…3…
    Ahh.

  50. Petition to change the demonym of Delaware to Delorean

  51. More Wendover production videos please

  52. This and lobbying/PACs is why I went from right to left on the political spectrum. Businesses are f%^&ing greedy. They'll sell your heart from your chest if it made them $0.03 profit.

  53. In your next mistake video mention “similie”, as it was spelt wrong.

  54. Digging the Biden burn!

  55. So you are selling giraffes for $25k? Thats cheaper than my college tuition this year!

  56. Its only tax evasion when other people compete with the US

  57. In DC comics Delaware is the state that the city of Metropolis is in (with neighboring Gotham city residing across the Delaware bay within New Jersey). That would make LexCorp and the Daily Planet 2 out of many companies benefiting from Delaware’s tax laws.

  58. the video is just like a real life lore video and he sounds and acts like him too whats happening?

  59. Your sense of humor definitely has value! I love watching your videos just because it makes me chuckle so much haha

  60. I would buy 392000 giraffes

  61. North north west Dakota

  62. I laughed at least twice out loud. Love the humor.

  63. Next video should be on how that building handles that much mail.

  64. Similes* not similies 🙂

  65. I bet there are apartments in Bucharest with more residents than that

  66. Please take a moment to realize the unlikely similarities between Delaware's and the Brazilian flag

  67. Do a video on the Montana loophole that refers to opening an LLC to evade taxes on vehicles

  68. Can you make a channel called Twice As Boring

  69. Watching this from Delaware 🙂 The tax law is not the ONLY thing that brings companies. Our court system is also well known for being VERY well versed in extremely complex corporate law / contract disputes, which it kind of has to be considering how many companies are legally based here. This is similar to how a very disproportionate amount of patent lawsuits are handled by a single court in Texas. And, for those that don't know, we also have a trick to attract out of state shoppers – we don't have any sales tax. Only 5 states are free of sales tax and none of the others border us, so it attracts a lot of people looking to make large, tax-free purchases. It's kind of nice to be able to buy something and have it actually cost the price on the shelf.

  70. Junior tax accountant in Australia here. I have no idea how intangible assets per se are taxed unless they were realised with a capital gain.

    Ohh it looks like it's the licensing fees that don't get taxed.

  71. Lol. I’m dying. From the disease that the government cure, because they are missing out on like 100000000 dollars of taxes

  72. So basically a US State is helping US companies to not pay taxes in the US, the USA never dissapoint in showing the many ways it can fuck over the bottom 90% of it's people.
    Americans: Keep electing Drumpf or Biden who will not change anything (that's what he said right) lmao.

  73. American Airlines dodging taxes and fucking over Americans, the irony.. oh boy.

  74. RIP to the Bahamas boys

  75. (Yes sure we got giraffes, but giraffe as interesting can get you a dozen US senators on your behalf! No tax! Get yours today!)

  76. YES WE GOT NOTICED WE DID IT BOIS YESSSS 0:59

  77. "Will you show a pic of Joe Biden?"

    "No I don't think I will"

  78. Another mistake HAI.

  79. This guy is funny 😂 👍🏾

  80. But wait, isn't Tax Evasion illegal?

  81. Man I fucking hate capitalism

  82. So this guy and wendover ARE the same dude correct? I know it should be obvious but just in case lol

  83. 4:58 Left handed person

  84. Now a video on how Amazon paid no tax pls

  85. The correct term is Delewho

  86. isn't software technically intangible?

  87. Is it sad that, just a moment after reading the title, I was able to guess "tax evasion"?

  88. Breaking News: The rich don't pay their fair share.

  89. I choose A, declare my body a temple LOL

  90. Joe Biden thing was hilarious

  91. 1:22 why do these coordinates point to a random house in the middle of nowhere? Is that where Sams sense of humor is held hostage for the past year?

  92. Do TWL on this channel

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