Topic > American Federalism: Balancing National and State Federalism…

States across the country have been able to manifest and validate competitive federalism through various tax policies that are attractive to businesses. Recently Toyota, one of the world's largest automakers, announced it would move its massive California operations to Plano, Texas, largely for corporate infrastructure in Texas. Toyota will be eligible for $40 million in tax breaks through the Texas Enterprise Fund, along with local tax incentives (LA Times, 2014). Texas and other states like Tennessee and Ohio are great examples of how states are able to generate more opportunities for their populations when given flexibility. Federal-only control could limit that flexibility, resulting in stagnation of innovation and options for businesses. Furthermore, this type of flexibility is what allows states to be laboratories of democracy. For example, when Colorado and Washington took the lead in legalizing marijuana in 2012, it gave the rest of the nation the opportunity to do so.