(You're right, I didn't take in the full subtlety of the Ireland EU situation. The specific EU rule seems much more defensible than my idea.) But regarding tha

(You're right, I didn't take in the full subtlety of the Ireland EU situation. The specific EU rule seems much more defensible than my idea.) But regarding that idea: You make some interesting arguments in favor of states essentially forming a "cartel" in order to avoid driving taxes too low. But then how do you decide what "too low" is? Who gets to decide what a reasonable tax rate is? If we're a bunch of people in lonely Isolated State and we vote to set our tax rates very low, does it seem reasonable that some central government strongly controlled by more populated states can say, "no, that's not fair"? On an emotional level, I'm very sympathetic to the idea that the group of people deciding policy in a region should not be too far removed from that region. (Of course, that it still might actually result in globally worse outcomes. But it might actually be worth it, just to avoid the unjust feeling of "policy dictated by people far away".) Even then, I'm not convinced it actually results in worse outcomes. California has very high taxes, and is nevertheless a very popular destination. Some sort of centralized system that required all states to have CA levels of taxation seems like it would almost certainly be worse overall... (I'm more thinking out loud than trying to make an argument.)