This is basically just the normal dynamic with American tax law where tax jurisdictions are terrible at coordinating, so they end up approving things and agreeing to tax things at a very low level in order to win the competition. Even when states/counties try to work together on this stuff there's a huge defector problem, like "hey I can back out of this multistate tax compact agreement and get 500 new jobs which will let me win local reelection".
I suppose you can reduce a lot of both good at bad things about the country to "because federalism".
I suppose you can reduce a lot of both good at bad things about the country to "because federalism".