This makes sense to me. In the 35% federal income tax bracket, a New Yorker who pays $10K in state and local taxes reduces his federal income tax by $3.5K. A Georgian who makes the same income pays, say, $6K in state and local taxes, reducing his federal income tax by $2.1K.
So, in NY, $3.5K of state and local taxes is paid by transferring money that would have been paid to the federal gov't to the NY treasury. In GA, it's only $2.1K.
Looked at another way, if the SALT deduction is repealed, then the New Yorker will actually pay $10K in state and local taxes, rather than the $6.5K he pays now. So state government spending will arouse more resistance than when the federal government subsidizes it.
Despite the SALT deductions, the average CA and NY household pays more to the fed than any other state including TX. And without the SALT deduction, that imbalance will only increase.
Although my fed taxes would increase, I’m not completely against the tax plan. But I’m certainly against the bogus premise that somehow the red states are subsidizing the big blue SALT states — total nonsense.