There is much ado regarding limitations on the deduction of various types of state taxes. Here are three points for you to consider. First, remember that governments are insatiable and greedy and want to extract as much money as they can from taxpayers.
Second understand that different levels of government have different interests and do not act in sync. The federal government wishes to maximize its revenue and has the right to provide, limit or take away deductions from its taxpayers and this has nothing to do with the states’ rights. In fact, the state gets its money whether or not there are deductions at the federal level. The fact that taxpayers might make decisions that help reduce their tax liability – as by moving – is really focused on what the government takes at all levels.
Finally, and something that seems to be ignored by most discussions is the fact that the state taxes are aimed at, surprise, high earners and high consumers. his is clearly taxing the wealthy much more than the majority of taxpayers and is progressive in nature. Why wouldn’t we have the wealthiest pay their fair share? Limiting deduction at the federal level helps to ensure that the fair share is actually placed on those who are enjoying the large incomes and consumption. How isn’t that fair?