Delaware's $1 Billion Incorporation Machine

Chevron Corp. used a shell company in a tax haven to escape hundreds of millions of dollars in Australian taxes, according to a 2015 court ruling. The subsidiary, which allowed Chevron to eliminate Australian taxes on $1.7 billion in profit earned there, wasn’t secreted away on a remote tropical island -- it was set up in the very mundane locale where corporate secrecy was born: Delaware.

For more than a century, Delaware has lured companies to file incorporation papers there by offering a specialized court system, laws that allow for avoiding other states’ taxes and a registration system that requires little public disclosure. Today, two-thirds of the Fortune 500 companies and 60 percent of U.S. hedge funds are registered there. That success has become a template for tax havens from Singapore to the Cayman Islands to Panama -- where a recent leak of millions of documents has revealed the questionable uses of many shell companies and put financial secrecy in headlines globally.