Concedes state reforms solve.
David Gamage 17, Professor of Law at Indiana University-Bloomington, Darien Shanske, Professor of Law, UC Davis School of Law, 2017, “Tax Cannibalization And Fiscal Federalism In The United States,” Northwestern University Law Review, 111 Nw. U.L. Rev. 295, lexis
Because this tax cannibalization primarily harms the federal government, rather than state governments, state policymakers have little incentive to reform their tax systems to alleviate this tax cannibalization. There is great potential for state-level tax reforms that could patch some of the holes in the federal and state corporate and personal income tax bases. We yearn for state governments to operate as laboratories of democracy by devising improved approaches to taxation. But none of this is likely to happen unless the federal government acts to better coordinate the tax policy incentives of state and federal governments. Under the current structure of federal tax law, state governments lack motivation to implement reforms that would alleviate the tax cannibalization problem.
Two decades ago, Professor Daniel Shaviro concluded that “the interaction between taxation and federalism is more important than ever,”14 and we argue that this conclusion holds even more so today. As economic transactions become increasingly global, the harm from misaligned tax policy grows ever greater. We argue that tax cannibalization is a major cause of dysfunctional fiscal federalism in the United States, and that the federal government can and should act to alleviate this problem.