[fastball]

I always thought having a federation of states was a great idea because you encourage competition between them which hypothetically means better outcomes.

But this example makes me feel like maybe that's not always the case. Is this a failure of federated states / competition?

[londons_explore]

It's a success of federation - competition has lowered effective tax rates.

The failure is that mom and pop grocery stores can't do the same because they can't easily move to another state, so states don't make special deals for them.

[fastball]

But is lowering effective tax rates a success if it is a race to the bottom?

[londons_explore]

If a state can still do all the functions their people expect of them with fewer taxes, I think most people would call that a win.

[fastball]

Yes but I guess what I'm worried about here is a tragedy of the commons-type situation where if a couple states do it (offer better tax incentives) than they can make up for the lost revenue in other ways but if everyone is doing it then you have, well, a tragedy of the commons.