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Franchise tax is a tax charged by some US states to corporations formed in those states based on the number of shares they issue or, in some cases, the amount of their assets. The purpose of the tax is to raise revenue for the state. The State of Delaware has a significant franchise tax, while other states, such as Nevada, have none at all or a smaller one. On the other hand, states with higher corporate income taxes usually have low franchise taxes and vice versa, so in the above given case, for example, Delaware has no corporate income tax at all for companies listed in the state but doing business outside.
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