Low tax states cannot subsidize high tax states.

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Not directly. Indirectly and perhaps too subtlety.

An analogy, let's say the federal government provides a generous tax deduction to people who pay a lot for country club memberships/dues. By the federal government not collecting the associated tax, the deficit is increased, the effects of which are born by all of us.

Most regular folks would condemn that country club deduction claiming rightfully, why should I, who never play golf, provide a subsidy to those who do. Golf is a luxury and if someone finds it worthwhile, fine but let them pay for it.

Same with "luxury" of generous government social spending supported by high state and local taxes. If your locality wants a sweeping set of above baseline government services, fine, but don't depend on a tax deduction to justify the spending to constituent taxpaying voters. Says the local mayor, "Sure $50M for tents for the homeless is a lot of money but the property tax to cover it is only $80 and even that $80 is deductible."

US Policy FAQ

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