The Times recently pointed out that while President Obama makes a lot of noise about shutting down overseas tax havens, there's an "onshore Cayman Islands" right here on the eastern seaboard: the little state of Delaware.

Two thirds of the Fortune 500 use Delaware to cut down on their state taxes, the Times says. And so we wondered: does New York's mayor get in on that action too?

It turns out that thirty-seven companies tied to Mike Bloomberg -- including his flagships Bloomberg Inc. and Bloomberg L.P. -- were incorporated in 'The First State.'

Most of the Bloomberg entities, including Bloomberg Cayman Islands LLC, are registered at 2711 Centerville Road, Suite 400, in Wilmington, Delaware, an address that also houses thousands of other businesses including Boeing, UBS, and Lexis Nexis. Bloomberg L.P. has a Cayman Island affiliate so it can "sell its products and services there," spokeswoman Judith Czelusniak says. (The company "developed a fully electronic listing and trading service" for the Cayman Stock Exchange, according to the islands' chamber of commerce.)

Czelusniak insists, however, that Bloomberg L.P. "enjoys no tax advantage by being incorporated in Delaware, nor has it ever," an argument that applies to its many Delaware affiliates.

Really? New York's mayor isn't avoiding New York taxes by having his companies keep an address in Wilmington?
We relayed Czelusniak's response to David Brunori, a professor at George Washington University School of Law, described in the Times story as a "specialist in state taxes." Brunori was hard-pressed to explain why else all these closely held Bloomberg entities would be registered there. "In my experience," Brunori says, "99.9 percent of the companies that incorporate in Delaware do so for tax avoidance reasons. So I believe that if Bloomberg incorporated in Delaware, it had a tax motivation."
 
Czelusniak wouldn't release any information about Bloomberg corporate tax payments, past or present, but she says that Bloomberg L.P. "does not engage in the types of tax planning that would artificially allocate a greater amount of income to Delaware that would tax it at a lower rate." In fact, Czelusniak maintains, "most of its income in the US is allocated to New York state and city," a practice that the company may well have been required to adhere to since 2007, when the state legislature passed a new combined reporting law designed to close Delaware-like loopholes for New York-headquartered corporations. (Nineteen other states have adopted similar laws that bar shifting taxes to lower-taxing jurisdictions.)

Though Czelusniak says the company, which is almost entirely owned by the mayor, doesn't release "financial results or information," its revenues and other key data routinely appear in major business publications.

When we asked the mayor's office and his campaign about making his corporate tax payments public, we were referred right back to the company. And state tax officials said the law barred them from releasing any information.

Bloomberg's City Hall press secretary Stu Loeser pointed out that various entities associated with the ownership of the Village Voice are also incorporated in Delaware. Yes, that's true. But we aren't running New York City. Shouldn't there be a different standard for the official elected to oversee a city bleeding from budget shortfalls when he's the sole owner of a $5 billion business in that town?

Czelusniak and the other Bloomberg minions consulted also declined to say why all these companies -- fifteen of which were formed while Bloomberg was CEO, including Bloomberg L.P (1986) -- were incorporated in Delaware if not for tax reasons. Czelusniak just says they were registered there "like many other companies."

Experts say there are other reasons to register in Delaware -- litigation protections that primarily protect public companies, as well as other advantages inapplicable to the Bloomberg businesses. The Times story emphasized the registration of holding companies in Delaware, which are set up to retain ownership of intangible assets like trademarks, patents and investments, but Czelusniak contended that wasn't the case with the Bloomberg entities either.

Four of the 38 Bloomberg companies are inactive or have been dissolved, according to Czelusniak, but Bloomberg Canada, Capital Group, Communications, Data, Electronic Trading Services, Financial Services, Korea, Philippines, Powermatch, Ventures and many others are still registered in Delaware. When Bloomberg thought, in 2006, that he was leaving government at the end of this term and going full time into philanthropy, he incorporated the Bloomberg Family Foundation in Delaware. It is building a new headquarters near his home on the East Side now.

The Cayman Islands and other offshore tax havens, stung by being singled out for criticism, have leveled their own gripes at Delaware, saying that the U.S. state does the same thing they're accused of. States like Maryland, meanwhile, have moved aggressively against Delaware-registered companies that actually do business elsewhere, reclaiming hundreds of millions in lost taxes.

Research Credit: Johanna Barr, Georgia Bobley, Tom Feeney Jr., Jane C. Timm