#31 Delaware

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The overall freedom ranking is a combination of personal and economic freedoms.

From 2012

State Facts

Net Migration Rate (?) 7.6 % 
Personal Income Growth (?) 1.43 %
How does the freedom ranking relate to these?


Delaware has lost ground even relative to the rest of the country on economic freedom since 2010. Part of the reason is that it had one of the most free-market health insurance systems before the enactment of the Patient Protection and Affordable Care Act (PPACA), and so it suffered disproportionately because of the federal law. Moreover, we find in this edition of the index that its much-touted advantage on corporate law is significantly overstated.

On fiscal policy, Delaware is about average. The overall tax burden, at about 9.2 percent of personal income, is average, but the state is highly fiscally centralized. With 1.6 competing jurisdictions per 100 square miles, Delawareans would stand to benefit were the state to allow more tax space for local governments. Subsidies and debt are a bit higher than average, but public employment is a bit lower than average.

Delaware is below average on most regulatory policy categories. Labor law is fairly anti-employment, with a new minimum wage and no right-to-work law. Land-use regulation ratcheted up significantly in the 2000–2010 period, as have renewable portfolio standards for utilities. Occupational freedom is mediocre. The state’s insurance commissioner treats property and casualty insurance rates under “prior approval” contrary to statute, according to the Insurance Information Institute.125 Delaware remains one of a handful of states not to have joined the Interstate Insurance Product Regulation Compact (IIPRC). Even the state’s vaunted liability system has actually deteriorated to just below average, we find. The state has enacted no tort reforms, and the size of the legal sector has grown, whether measured in number of lawyers or share of GDP.

Delaware is close to the national average in most personal freedom categories. In 2013, the state legislature legalized same-sex marriage, after having legalized civil unions in 2011. In 2011–12, the state’s medical cannabis law was expanded. Alcohol taxes, already a bit lower than average, have eroded over time because of inflation. The state is mediocre on gun rights; the biggest problem area is the may-issue regime for concealed-carry licensing. Gambling is more restricted than the national average, although the state has legalized online gambling for its own residents; in the future, this move may yield significant new business. Delaware has no private school choice programs, but homeschooling is easy. Smoking bans are comprehensive, but cigarette taxes are only modestly higher than average. The state’s civil asset forfeiture law is tied for worst in the country, with few protections for innocent owners.

Policy Recommendations

  • Fiscal: Reduce state-level taxes and education spending. Delaware is one of the freest-spending states in the country on education. Allow local governments to pick up more of the school spending out of their own fiscal resources.
  • Regulatory: Liberalize insurance laws by moving to a “use and file” system for property and casualty rates and life insurance forms, and join the IIPRC. These changes would vault Delaware from 33rd to 28th place on regulatory policy, just below Texas.
  • Personal: Enact a tax credit program for parents’ educational expenses and contributions to scholarship funds. This change would have moved Delaware from 31st to 25th on personal freedom.
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