President Biden may be Delaware’s favorite son, but he has aggressively pushed policies that stick it to the state’s largest industries that together generate roughly $10 billion in annual revenue.
The president has taken aim at the state’s two largest cash cows — corporations and poultry — by proposing higher corporate taxes and blaming chicken processors for high food prices. He has also advocated tighter regulations in the financial and chemical industries, despite Delaware’s claim to be the “capital of the world” for both sectors.
Even Mr. Biden’s supporters worry that the rhetoric will cost jobs in Delaware.
Martin Willis, a Democratic candidate for the Delaware General Assembly and a 2020 Democratic National Convention delegate for Mr. Biden, expressed concern that the president could break up the poultry and meat industries.
“The poultry business in the state of Delaware is a big business. It’s a really big business,” he said. “Truckingwise, it employs a lot of people. It brings a lot of revenue into the state of Delaware.”
Mr. Willis said Mr. Biden, who represented Delaware in the Senate for 36 years, has a record of supporting the state’s businesses and that the mere prestige of being the president’s home state has created an economic windfall.
The Delaware Tourism Office said last year that Mr. Biden’s presidency has been a boon to tourism and hospitality businesses.
Critics who worry that Delaware might be hit hard by the administration’s policies say they aren’t surprised. They note that Mr. Biden has always put support for taxes and regulation over state concerns.
In the early 2000s, Mr. Biden rebuffed a request from DuPont, the state’s largest employer at the time, to drop his support for legislation that would increase regulations for transporting hazardous materials by rail.
“The anti-business theme of this administration is very apparent,” said John Toedtman of the conservative Caesar Rodney Institute, a think tank in Delaware. “But now Biden’s trying to send a national message, not a state message.”
The White House did not respond to multiple requests for comment for this article.
Corporations
Delaware’s largest source of revenue is the collection of fees from corporations that flock to the state for its favorable tax laws. Those fees added nearly $1.5 billion to the state coffers in the 2020 fiscal year and accounted for roughly half of the revenue. Other economic benefits from corporations make the total as high as 75%.
That has not stopped Mr. Biden from blasting the state’s meal ticket.
“More corporations [are] incorporated in my state of Delaware than all states combined. And guess what? They ain’t paying enough,” Mr. Biden said during a visit to a General Motors plant in December.
Mr. Biden has proposed increasing taxes on corporations across the country to fund his ambitious $1.75 trillion social welfare and economic climate bill, which has since been derailed. Nevertheless, the tax hikes threaten to force some corporations to leave Delaware and register in countries overseas with more favorable tax laws.
“I would think there would be naturally some effect of migration where a Delaware corporation says, ‘The heck with this. We are going to change our domicile to Ireland or the Caymans,’” said Larry Hamermesh, a professor of corporate law at Widener University Delaware Law School. “If U.S. [corporate] tax goes higher than other countries, that would be a problem for Delaware.”
Mr. Biden has sought to prevent corporations from flocking overseas by working with other nations to impose a global minimum tax on corporations. That would set a floor for corporate taxes, undercutting countries trying to lure businesses away from the U.S. with lower rates.
Kat Caudle, chair of the New Castle County Democratic Party, said she agrees with Mr. Biden’s move to raise taxes on corporations because the national impact should outweigh Delaware’s individual needs.
“I probably will be one of the few who will not side with the businesses here,” Ms. Caudle said. “I understand that it benefits the state to have them here and understand the laws that are in place benefit Delawareans … but I think that at the same time, if I’m going to be a Democrat and I’m going to be a true Democrat, we need to hold businesses accountable for their actions and make sure they’re paying their fair share.”
For now, Mr. Biden’s corporate tax proposals remain stalled in the Senate along with his big-spending agenda.
Poultry
Mr. Biden has blamed the nation’s beef, pork and chicken processors for skyrocketing food prices. He said four meat companies are taking advantage of a near-monopoly to soak consumers.
The Delmarva Peninsula is home to several poultry producers, including Perdue Farms, Mountaire Farms, Haim Chicken and Tyson Foods. Mr. Biden says Tyson is part of the meat monopoly. Perdue Farms is the state’s fifth-largest employer.
Delaware is the country’s eighth-largest producer of broiler or chickens raised for meat, generating $7.23 billion annually in economic activity throughout the state, according to data from the National Chicken Council.
“The rhetoric from the administration has been surprising given President Biden’s long history of support for the chicken industry [in] Delaware, a state where chickens outnumber people and where chicken is the No. 1 agricultural commodity,” said Mike Brown, president of the National Chicken Council.
Mr. Brown has heard from several companies and farmers in Delaware who he said were “surprised and alarmed” by the president’s rhetoric.
Mr. Biden acknowledged the outsized role of the poultry industry in the state during an event this month. His administration pledged $1 billion to support independent chicken processors that would compete with Delaware companies.
Mr. Biden said his proposals will help Delaware’s chicken industry create more overall competition among chicken processors.
Although Mr. Biden hasn’t proposed any concrete steps to break up what he says is a near-monopoly, Mr. Brown said, the uncertainty is just as concerning.
“Frankly, we don’t know what to expect will follow the heated rhetoric,” he said.
Banking
Banks based in Delaware employ more than 40,000 people, and their franchise taxes generate $95 million annually for the state.
Financial servicing is Delaware’s third-largest industry, ranking just behind poultry and the corporate sector.
JPMorgan Chase and Bank of America are the state’s second- and third-largest employers.
Mr. Toedtman said he is most worried about the administration’s impact on the state’s banking industry. Pointing to Mr. Biden’s nominees for the Federal Reserve, he worries that they will impose regulations that will choke the industry’s growth.
“The banking industry is really in the crosshairs of this administration,” he said. “They are trying to stack the Federal Reserve with bomb-throwing liberals that hate the banks.”
Mr. Biden has picked several liberal darlings for top seats on the nation’s central bank, including Lael Brainard for vice chair.
Sen. Elizabeth Warren, a liberal Massachusetts Democrat, said Ms. Brainard is in line with the president’s economic agenda.
The Fed is expected to raise interest rates this year, which analysts say could affect Delaware’s credit card industry. Credit card payments have been up in recent years as low interest rates and government-issued COVID-19 relief payments stimulate spending.
Chemicals
Delaware was once synonymous with DuPont, an international chemical company that was the state’s largest employer for decades.
DuPont’s footprint in Delaware and around the globe has shrunk in recent years.
The state is home to several other chemical companies, including Chemours, a DuPont spinoff, and BASF.
Upon taking office, Mr. Biden ordered a sweeping review of more than a dozen Environmental Protection Agency actions directly affecting the chemical industry.
His team also distributed a list of specific regulations that the president wanted to be scrutinized, including procedures for evaluating chemical risks.
Mr. Toedtman said the increased regulations and fines for noncompliance will come at the expense of businesses. He noted that chemicals were already the most heavily regulated sector in the country.
“The worst motivation you can have for a government organization is … arbitrarily fining people,” he said.
