[Amezarak]

Right...but the existence of a federal tax is irrelevant; there is still tons of tax competition because the states assess their own taxes. The federal tax rate, from the competitive perspective, is irrelevant because everyone pays it. But every state has different taxes and they compete with each other to give the biggest tax breaks.

For for example you might have:

State A: State income tax: 5% Property tax: 5% Sales tax: 5%

State B: State income tax: 6% Property tax: 6% Sales tax: 5%

Yes, everyone in both State A and B pay, let's say, a federal 7% income tax and payroll taxes. But the state taxes make a huge difference. State says to Wal-Corp - build a store here and you'll be exempt from property taxes and sales tax for 5 years, and we'll give you a special state income tax credit that reduces it to 3%. That's the kind of deal making we have going on with states, except the federal government doesn't intervene to stop it like the EU did here.