DOVER, Del. (AP) - Delaware House
Democrats narrowly approved a package of tax increases Thursday that Gov. Jack
Markell is relying on to help pay for his proposed spending plan for next
approved on a 26-13 straight party line vote, increases the annual tax on
limited liability companies and business partnerships from $250 to $300. It
also increases the minimum annual corporation franchise tax by $100.
No Republicans voted for
the bill, which received just one more vote than the required three-fifth
majority. House leaders twice postponed the vote in recent days because of the
absence of Democratic lawmakers.
Under state law, tax and
fee bills require three-fifths majorities in both the House and Senate, while
bills revising the state's general corporation laws require two-thirds
unsuccessfully pushed for a two-thirds vote requirement for business tax bills,
arguing that they altered corporation law by changing the financial obligations
of corporations and other business entities.
"If it doesn't pass
with two-thirds, then we have the potential of lawsuits," said Ron Smith,
an attorney for House Republicans.
But Andrew Lippstone,
Markell's chief counsel, argued that the legislation did not require a
two-thirds majority, which it failed to obtain.
"It's a revenue
bill," he said, adding that anyone trying to challenge the vote in court
if the legislation becomes law would have "a very tough case."
say the tax increases should generate an additional $51 million next year.
Secretary of State
Jeffrey Bullock, whose department includes the Division of Corporations, said
the tax and fee increases would be effective this year if approved by the
Senate. Businesses would see the increases reflected in payments for this year
that are due next spring.
unsuccessfully to amend the bill to have the tax and fee increases expire after
three years, noting that many small business owners already are struggling with
higher workers compensation and unemployment tax obligations.
"I see business
people every day ... and they're concerned about the fact that this is one more
tax, one more fee, they have to pay," said Minority Leader Danny Short,
say the vast majority of tax and fee increases, more than 90 percent, will be
paid by business entities not located in Delaware, which is the legal home for
more than 1 million business entities, including more than half of all publicly
traded companies in the United States.
But a rough estimate by the administration indicates that some 40,000
entities doing business in Delaware could be affected by the legislation,