income (in accounting terms reducing their income tax base by expenses) to the company set up in Delaware where it is not subject to state taxes. Property such as a trademark is hard to put an exact number on which offers the companies a lot of leeway on how much money they move to Delaware. If companies don't conduct any business in Delaware, then they pay a lower franchise tax instead of the corporate income tax. Also because of its business-friendly usury laws the interest rates can go above the average there and therefore Delaware attracts financial companies. Delaware also offers benefits in terms of high secrecy levels (companies don't have to file their beneficiaries nor their officers and directors) and predictable judiciary rulings in conflicts between companies. Nevada The state of Nevada has no state income tax, no personal income tax, no inheritance tax, and no franchise tax. This makes it a very widely used tax haven alongside of South Dakota and Delaware. Nevada also doesn't have an agreement with the IRS on sharing information, so some entities choose to incorporate here as to enjoy the benefits of high privacy. In addition, there are other laws on privacy and company officers’ liability that make Nevada business friendly. Economics According to a 2011 study, the U.S. economy would become approximately $1.6 trillion larger or $5,200 wealthier per person, after a simplification of the complex U.S. tax system. History Before 1776, the American Colonies were subject to taxation by Great Britain and also imposed local taxes. Property taxes were imposed in the Colonies as early as 1634. In 1673, the English Parliament imposed a tax on exports from the American Colonies, and with it created the first tax administration in what would become the United States. Other tariffs and taxes were imposed by Parliament. Most of the colonies and many localities adopted property taxes. Under Article VIII of the Articles of Confederation, the United States government did not have the power to tax. All such power lay with the states. The United States Constitution, adopted in 1787, authorized the federal government to lay and collect taxes, but required that some types of tax revenues be given to the states in proportion to population. Tariffs were the principal federal tax through the 1800s. By 1796, state and local governments in fourteen of the 15 states taxed land. Delaware taxed the income from