>>>If this figure was $12,850 for “high-tax blue state” like New Jersey, or $13,800 for Connecticut, etc. — even WITH the state/local tax deduction in place — then how can you possibly claim that these states are being subsidized by “red” states like Alabama ($4,900), South Carolina ($4,700) or Mississippi ($3,900)?<<<
Under the Tax Bill, people can deduct up to $10,000 in State Taxes (Income / Property / Vehicle Registration).
The average Low Tax States Residents won’t even hit that number, while the average High Tax State Residents will.
In those High Tax States paying an average of $13,000, the first $10,000 is still Deductible, leaving them paying the Federal Tax Rate on $3,000.
If they ae in a 15% Tax Bracket, the new Law “costs” them an additional $450 in Federal Income Taxes. That is also offset by the Reduction in Federal Income Tax Rates across the board, which lowers their Federal Income Tax obligation.
If the Blue States really care about the Taxpayers who live there (LOL), they can simply lower their Tax Rates rather than blaming the new Tax Bill for their self inflicted problems.
Under the 2017 tax reform law there is no 15% tax bracket. There are 12% and 22% brackets, and most of the taxpayers in those brackets wouldn’t be deducting their state taxes anyway because they would just take the (new) higher standard deduction instead.