Redefining Democracy: Delaware City’s Plan to Include Businesses in Elections Sparks Controversy

As local elections in the United States are underway, the eligibility rules for voters vary from place to place. Typically, the requirement is that voters must be living humans casting their votes on their own behalf. However, in several municipalities in Delaware, the definition of a voter has been expanded to include “artificial entities” such as businesses, LLCs, partnerships, and trusts.

Delaware is renowned as one of the most welcoming locations for companies of all sizes to incorporate for legal and tax purposes. The state’s business-friendly environment has attracted numerous corporations, making it a global hub for businesses. However, allowing businesses to directly participate in municipal elections has sparked controversy and raised concerns among various groups.

Common Cause Delaware, a citizens advocacy group that defends voting rights and fights against the corrupting effect of large money in state politics, is one of the groups that is opposed to this plan. Allowing companies to vote in local elections, as Claire Snyder-Hall, executive director of Common Cause Delaware, argues, waters down the voice of the population and increases the idea that corporations are granted excessive power.

Seaford, a city with approximately 8,500 residents, is the latest municipality in Delaware to propose allowing businesses to vote in local elections. Seaford has undergone economic struggles, particularly after the closure of DuPont’s nylon factory. The city has been working towards revitalization through the development of business parks and downtown revitalization efforts, aiming to strengthen its economy.

Mayor David Grenshaw of Seaford cast the tie-breaking vote to pass a motion in the city council to change the city’s charter. By making this adjustment, “artificial entities” such as corporations that do business within city borders and possess property there will be entitled to vote alongside city residents and non-citizens who own property there.. This proposal would potentially allow a wide range of companies, from well-known corporations to small LLCs and partnerships, to become eligible voters.

To implement the proposed changes, Seaford requires the approval of the state’s lawmakers and the governor. Grenshaw initially believed that obtaining this approval would not be an issue, citing the successful implementation of similar measures in four other municipalities. However, Seaford’s proposal faced pushback during the Delaware General Assembly.

The House bill, which sought to authorize Seaford’s changes, faced several challenges and was eventually defeated. However, it was later allowed reconsideration and passed. The bill was then sent to the state Senate, but it did not come up for a vote before the Senate’s session ended. As the Senate is now in recess until January 2024, the proposal’s floor consideration will have to wait unless a special session is called.

It is predicted that 234 businesses in Seaford would be able to vote once the plan is enacted. Depending on voter participation, this may have a major impact on next elections. Only 34% of eligible voters participated in the most recent municipal election. All 234 firms have a lot of clout when they vote together.

However, Mayor Grenshaw does not anticipate a high turnout among businesses, stating that even a dozen votes would be considered incredible. While Snyder-Hall agrees that Seaford residents should participate in greater numbers, she raises concerns about the impact of businesses becoming registered voters. It may lead residents to question the importance of their own votes if powerful entities and campaign contributors already have a stake in the outcome.

The case of Seaford, Delaware, raises questions about whether other localities, both within and outside of Delaware, might consider including businesses in their elections. Hal Weitzman, author of “What’s the Matter with Delaware? How the First State Has Favored the Rich, Powerful, and Criminal – and How It Costs Us All,” suggests that the Seaford case might be more of a quirk than a significant shift in how local elections are conducted.

However, the discussion surrounding Seaford sheds light on Delaware’s unique position in the business ecosystem. Despite being the second smallest state in the nation, Delaware is considered one of the most business-friendly locations worldwide. The state’s laws and institutions attract companies seeking favorable legal environments for incorporation, mergers, business disputes, and bankruptcy proceedings.

Delaware’s appeal also stems from its relatively low-tax environment. With no sales tax and no tax on profits from intellectual property, the state offers attractive conditions for businesses. Additionally, Delaware’s streamlined online company registration process, with minimal documentation requirements, makes it convenient for entrepreneurs. Revenue from business formation is a major source of income for the state.

Currently, Delaware has over 1.9 million registered business entities, a number projected to exceed 2 million this year. This surpasses the state’s population of just over 1 million, equating to roughly two registered businesses per person. Among these businesses are not only Fortune 500 companies but also numerous lesser-known private companies, partnerships, LLCs, and trusts, some of which choose to remain anonymous.

While the proposed changes in Seaford aim to include businesses as voters, the bill also includes provisions to ensure transparency and prevent multiple votes from a single property-owning business. Businesses registering to vote would be required to disclose their “beneficial owners,” typically individuals or entities owning or controlling at least 25% of the business. The city clerk’s office would conduct annual cross-checks to verify property ownership, and the bill mandates cross-referencing of voter registrations to prevent duplicate votes from businesses owning multiple properties.

Delaware’s plan to include businesses as voters in local elections has sparked controversy and raised important questions about the role of corporations in democratic processes. While Seaford’s proposal faced challenges during the legislative process, its potential impact on future elections and the broader implications for democracy remain subjects of debate. As the discussion continues, Delaware’s unique business-friendly environment and its significance in the corporate world continue to garner attention.