Magazine May 28, 2018, Issue

Degenerate Federalism

Amazon real-estate vice president John Schoettler (Lindsey Wasson/Reuters)
In practice, federalism has become largely a way of bilking U.S. taxpayers

Over the past few months, states and cities have been competing for the privilege of hosting Amazon’s second headquarters. To this end, Maryland has pledged a “blank check” in transportation spending tailored to the company’s needs, New Jersey has enacted bipartisan legislation to provide Amazon $7 billion in tax credits, and Chicago is proposing to give the company $1.32 billion in personal income taxes paid by its workers. But residents of those localities concerned about a “winner’s curse” shouldn’t worry — taxing and spending by state governments is now heavily subsidized by federal taxpayers.

This practice of cost shifting has produced

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