That's a common misconception; even New York has a more favorable corporate tax structure and the all-time best is Alaska. However, Delaware has a long case history of corporate law, meaning that outcomes are very predictable, a very desirable feature.

Why? In part because the state is so small, and in part by design; in the late 19th century Delaware was one of the first states to remove the requirement that businesses incorporation be approved by the state legislature. New Jersey was actually the first, however then-governor Woodrow Wilson tightened legislation at the turn of the century.

Because of the ease of incorporation, Delaware developed a very well-defined corporate law code. Nowadays, "Introduction to U.S. Business Law" courses in MBA programs in the U.S. and abroad study Delaware Law as a matter of course.