Remember that the federal government doesn't tax states, or give (most of) the transfers to states - they mostly go to individuals. The state aggregates are a convenient number for people trying to make a political point, but it doesn't really support what they are suggesting.
This change is a redistribution from people who pay a lot of taxes to people who pay less taxes. Because the US tax system is already progressive (increasing rates with increasing income), this change makes it MORE progressive overall. It could be better targeted at just high-income/high-wealth people, but it generally does pretty well by that measure, because high-income/high wealth people pay most of the taxes.
Low-income, low-asset people will actually get a tax reduction, because of the increased standard deduction, even if they live in a high-tax state. That leaves people with a lot of income and/or a lot of assets - people paying over $10,000/year as STATE income, property, or sales taxes (excluding federal income and payroll taxes!). Various measures show that 88% of that deduction goes to people making over $100,000/year, and only 30-40% of filers even in those rich/expensive states take the deduction today (a much smaller/richer percentage would exceed the $10,000 limit).
If you're really wealthy in any state, you're going to hit that limit in one or more of those areas. You just hit it faster in high-tax states. Take Wyoming for example: "red state", no income tax, low property tax rate, 4% sales tax. Your 2 Bedroom home in Jackson at just shy of $2 million is going to put you over the property tax exclusion. https://www.jacksonholerr.com/PropertyDetails?mls_num=18-305... (there are cheaper 2-br homes in Jackson - and much cheaper homes not far from Jackson)
This also illustrates that the people most hurt by the change will be the "house poor" - moderate income, but own a house in an expensive area, so they have high property taxes. They may also get dinged by the reduced mortgage deduction ($1M debt to $750K debt).
This change is a redistribution from people who pay a lot of taxes to people who pay less taxes. Because the US tax system is already progressive (increasing rates with increasing income), this change makes it MORE progressive overall. It could be better targeted at just high-income/high-wealth people, but it generally does pretty well by that measure, because high-income/high wealth people pay most of the taxes.
Low-income, low-asset people will actually get a tax reduction, because of the increased standard deduction, even if they live in a high-tax state. That leaves people with a lot of income and/or a lot of assets - people paying over $10,000/year as STATE income, property, or sales taxes (excluding federal income and payroll taxes!). Various measures show that 88% of that deduction goes to people making over $100,000/year, and only 30-40% of filers even in those rich/expensive states take the deduction today (a much smaller/richer percentage would exceed the $10,000 limit).
If you're really wealthy in any state, you're going to hit that limit in one or more of those areas. You just hit it faster in high-tax states. Take Wyoming for example: "red state", no income tax, low property tax rate, 4% sales tax. Your 2 Bedroom home in Jackson at just shy of $2 million is going to put you over the property tax exclusion. https://www.jacksonholerr.com/PropertyDetails?mls_num=18-305... (there are cheaper 2-br homes in Jackson - and much cheaper homes not far from Jackson)
This also illustrates that the people most hurt by the change will be the "house poor" - moderate income, but own a house in an expensive area, so they have high property taxes. They may also get dinged by the reduced mortgage deduction ($1M debt to $750K debt).