Why didn’t Maria die? Is Tony Kushner a better playwrite than Shakespeare? Or is Spielberg still incapable of handling hard truths without pulling his punches?
It’s a faithful adaptation of a 1957 stage production so your gripe is with Jerome Robbins (and maybe, Arthur Laurents and Stephen Sondheim) not Kushner or Spielberg.
I haven’t seen the new one (yet), but in the 1960 film version, it wasn’t a total-kill ending. I think that was an adaptation of the stage version of the musical.
To directly answer the OP, it’s worth considering that most of the financiers of the original stage production dropped out after previews because the ending was too big a downer even with just one of the leads dying. All of the principles were well educated in what sells on Broadway and we’re well aware that they were pushing the envelope with that ending. Being faithful to the Bard and killing them BOTH was probably rejected very early on in the play’s development. Besides, the shaming of the rival gangs is more impactful coming from Maria than from Lt. Schrank (Prince Escalus) like in Shakespeare.
And Prince Escalus is a neutral authority figure in Shakespeare. He merely wants peace between the warring parties. Maria, however, includes the police in her criticism when she says, “All of you! You all killed him! And my brother, and Riff.”
It’s also a great subversion of what the audience is expecting. (I’m a fan of twist endings.) I saw this movie for the first time in ninth grade (after the class read Romeo and Juliet) and I expected Maria to die by suicide. I was very much surprised.