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Why Are the Majority of U.S. Companies Incorporated in Delaware?

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Over a million businesses—more than 50 percent of publicly traded companies in the U.S. and more than 60 percent of Fortune 500 companies—are incorporated in Delaware. But with a population of only 941,600 (as of October 2015), why do so many big companies, from Bank of America to Google to Coca-Cola, incorporate in Delaware?

Delaware’s courts, tax system, laws, and policies have made it an attractive state for businesses to incorporate in since at least the early 1900s [PDF]. Speaking to The New York Times, David Brunori, a George Washington University Law School professor and tax expert, explained that “Delaware is an outlier in the way it does business … what it offers is an opportunity to game the system and do it legally.”

First, the Delaware Court of Chancery (established in 1792) allows companies to resolve disputes quickly with a judge rather than a jury. Judges for the Court of Chancery specialize in corporate law, draw on hundreds of years of legal precedent, and hear only business-related cases.

Second, Delaware’s tax system gives businesses several ways to legally minimize their tax bills. Companies that are incorporated in Delaware but do business in other states don’t have to pay state corporate income tax to Delaware. Some groups accuse Delaware of being a tax haven because the “Delaware loophole” allows companies to declare certain types of revenue in Delaware rather than in the state where the business actually occurred. Delaware also doesn’t tax profits on royalty payments, trademarks, or copyrights.

Third, Delaware’s laws and policies make it easy for businesses to incorporate, avoid liability, and retain privacy. Delaware’s Department of State makes it convenient for businesses to fill out incorporation paperwork, which can be done in under an hour. Because they don’t have to give much personal identifying information, company officers who incorporate or set up business accounts in Delaware can also maintain privacy, ensure anonymity, and avoid personal liability.

Because Delaware has had a reputation for being friendly to businesses for such a long time, it makes sense logistically for businesses to incorporate in the state. Most corporate attorneys know Delaware’s business laws, and many IPO-minded investment banks prefer to work with companies that are incorporated in Delaware.

Not everyone loves Delaware’s stance on business, though. Because of its relatively lax regulations, the state attracts illegal businesses that can easily establish shell companies and launder money. Delaware requires very little documentation and identification information to set up a shell company, so it can be even easier to set up a business there than in an international tax haven like the Cayman Islands. Additionally, other states collect less tax revenue because so many businesses choose to incorporate in Delaware rather than nearby states such as Pennsylvania and New York.

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Big Questions
Do Bacteria Have Bacteria?
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Drew Smith:

Do bacteria have bacteria? Yes.

We know that bacteria range in size from 0.2 micrometers to nearly one millimeter. That’s more than a thousand-fold difference, easily enough to accommodate a small bacterium inside a larger one.

Nothing forbids bacteria from invading other bacteria, and in biology, that which is not forbidden is inevitable.

We have at least one example: Like many mealybugs, Planococcus citri has a bacterial endosymbiont, in this case the β-proteobacterium Tremblaya princeps. And this endosymbiont in turn has the γ-proteobacterium Moranella endobia living inside it. See for yourself:

Fluorescent In-Situ Hybridization confirming that intrabacterial symbionts reside inside Tremblaya cells in (A) M. hirsutus and (B) P. marginatus mealybugs. Tremblaya cells are in green, and γ-proteobacterial symbionts are in red. (Scale bar: 10 μm.)
Fluorescent In-Situ Hybridization confirming that intrabacterial symbionts reside inside Tremblaya cells in (A) M. hirsutus and (B) P. marginatus mealybugs. Tremblaya cells are in green, and γ-proteobacterial symbionts are in red. (Scale bar: 10 μm.)

I don’t know of examples of free-living bacteria hosting other bacteria within them, but that reflects either my ignorance or the likelihood that we haven’t looked hard enough for them. I’m sure they are out there.

Most (not all) scientists studying the origin of eukaryotic cells believe that they are descended from Archaea.

All scientists accept that the mitochondria which live inside eukaryotic cells are descendants of invasive alpha-proteobacteria. What’s not clear is whether archeal cells became eukaryotic in nature—that is, acquired internal membranes and transport systems—before or after acquiring mitochondria. The two scenarios can be sketched out like this:


The two hypotheses on the origin of eukaryotes:

(A) Archaezoan hypothesis.

(B) Symbiotic hypothesis.

The shapes within the eukaryotic cell denote the nucleus, the endomembrane system, and the cytoskeleton. The irregular gray shape denotes a putative wall-less archaeon that could have been the host of the alpha-proteobacterial endosymbiont, whereas the oblong red shape denotes a typical archaeon with a cell wall. A: archaea; B: bacteria; E: eukaryote; LUCA: last universal common ancestor of cellular life forms; LECA: last eukaryotic common ancestor; E-arch: putative archaezoan (primitive amitochondrial eukaryote); E-mit: primitive mitochondrial eukaryote; alpha:alpha-proteobacterium, ancestor of the mitochondrion.

The Archaezoan hypothesis has been given a bit of a boost by the discovery of Lokiarcheota. This complex Archaean has genes for phagocytosis, intracellular membrane formation and intracellular transport and signaling—hallmark activities of eukaryotic cells. The Lokiarcheotan genes are clearly related to eukaryotic genes, indicating a common origin.

Bacteria-within-bacteria is not only not a crazy idea, it probably accounts for the origin of Eucarya, and thus our own species.

We don’t know how common this arrangement is—we mostly study bacteria these days by sequencing their DNA. This is great for detecting uncultivatable species (which are 99 percent of them), but doesn’t tell us whether they are free-living or are some kind of symbiont. For that, someone would have to spend a lot of time prepping environmental samples for close examination by microscopic methods, a tedious project indeed. But one well worth doing, as it may shed more light on the history of life—which is often a history of conflict turned to cooperation. That’s a story which never gets old or stale.

This post originally appeared on Quora. Click here to view.

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Big Questions
Why Do Cats 'Blep'?
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As pet owners are well aware, cats are inscrutable creatures. They hiss at bare walls. They invite petting and then answer with scratching ingratitude. Their eyes are wandering globes of murky motivations.

Sometimes, you may catch your cat staring off into the abyss with his or her tongue lolling out of their mouth. This cartoonish expression, which is atypical of a cat’s normally regal air, has been identified as a “blep” by internet cat photo connoisseurs. An example:

Cunning as they are, cats probably don’t have the self-awareness to realize how charming this is. So why do cats really blep?

In a piece for Inverse, cat consultant Amy Shojai expressed the belief that a blep could be associated with the Flehmen response, which describes the act of a cat “smelling” their environment with their tongue. As a cat pants with his or her mouth open, pheromones are collected and passed along to the vomeronasal organ on the roof of their mouth. This typically happens when cats want to learn more about other cats or intriguing scents, like your dirty socks.

While the Flehmen response might precede a blep, it is not precisely a blep. That involves the cat’s mouth being closed while the tongue hangs out listlessly.

Ingrid Johnson, a certified cat behavior consultant through the International Association of Animal Behavior Consultants and the owner of Fundamentally Feline, tells Mental Floss that cat bleps may have several other plausible explanations. “It’s likely they don’t feel it or even realize they’re doing it,” she says. “One reason for that might be that they’re on medication that causes relaxation. Something for anxiety or stress or a muscle relaxer would do it.”

A photo of a cat sticking its tongue out
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If the cat isn’t sedated and unfurling their tongue because they’re high, then it’s possible that an anatomic cause is behind a blep: Johnson says she’s seen several cats display their tongues after having teeth extracted for health reasons. “Canine teeth help keep the tongue in place, so this would be a more common behavior for cats missing teeth, particularly on the bottom.”

A blep might even be breed-specific. Persians, which have been bred to have flat faces, might dangle their tongues because they lack the real estate to store it. “I see it a lot with Persians because there’s just no room to tuck it back in,” Johnson says. A cat may also simply have a Gene Simmons-sized tongue that gets caught on their incisors during a grooming session, leading to repeated bleps.

Whatever the origin, bleps are generally no cause for concern unless they’re doing it on a regular basis. That could be sign of an oral problem with their gums or teeth, prompting an evaluation by a veterinarian. Otherwise, a blep can either be admired—or retracted with a gentle prod of the tongue (provided your cat puts up with that kind of nonsense). “They might put up with touching their tongue, or they may bite or swipe at you,” Johnson says. “It depends on the temperament of the cat.” Considering the possible wrath involved, it may be best to let them blep in peace.

Have you got a Big Question you'd like us to answer? If so, let us know by emailing us at bigquestions@mentalfloss.com.

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