The United States is under siege; however, the cause is not a foreign adversary. Rather, infighting among states to attract and retain big businesses is jeopardizing the Nation’s economic prosperity.
States compete for businesses, using tax incentives, hoping to capitalize on the benefits these businesses represent. Benefits include improved job growth numbers, a future increase in tax revenue, or, simply, elevated political clout. While competition can lead to a more efficient use of resources, unregulated competition between states for businesses does not illustrate this theory. A national auction for a business, where states are blind to rival offers, may, and arguably does, lead to states offering inflated tax incentives—tax incentives that discriminate against interstate commerce.
Nonetheless, the Constitution appears to provide a path forward. As seen through dormant Commerce Clause jurisprudence, the Constitution makes it unlawful for states to implement tax incentives that discriminate against interstate commerce. But the current case-by-case approach of litigating the legality of state-level tax incentives suffers from various inefficiencies. This Note offers an alternative solution.
This Note argues that ending the economic war among states, caused by the imprudent distribution of state-level tax incentives, requires Congress to promulgate legislation modeled after the European Union's State Aid Control Treaty.
Ending the Economic War Among States,
70 Clev. St. L. Rev.
available at https://engagedscholarship.csuohio.edu/clevstlrev/vol70/iss2/8