I'm not going to spend a huge amount of time doing this research, but here's a table of federal highway funding by state. Looks like there's a total of $42 billion doled out among the states last year. This is about $128 per person, but some states got more than this and others less. Mississippi (one of the poorest states) got about $175 per person, while Maryland (one of the richest) got $107.
Even so, assuming this is correct, isn't the best solution to change the funding levels instead of an elaborate deduction mechanism that is unevenn, helping those who run up big tax bills (eg buying way more house than needed) vs those living more modesty.
I'm not arguing that this tax break is the best solution (or even a good one). I'm just saying that removing it (without correcting funding imbalances at the source) has the effect of exacerbating these imbalances rather than narrowing them.
Thanks for the data. I did some searching around today and found similar numbers. The numbers are all over the place. NY:$210/person, NJ:$121/person, CA:$108/person...I'm not seeing any rhyme or reason to the difference, other then for some reason Congress has apportioned different amounts to different states, presumably because each have different projects and needs. On average red states are more dependant on federal dollars than blue states (I was already aware of this), but on an individual basis they are again all over the map, with some states like KS the least dependant, and CA and NY middling, and of course a few poor red states very dependant. But even the notion of dependency is difficult to nail down. What federal dollars should be counted? Federal detention facilities, military installations, research facilities? I very much doubt many Californians would welcome an artillery range or munitions dump in their area.
Regarding the resulting imbalance of caping the deduction. The Federal dollars for highway funding in CA are near $4B. To put that in context the state budget is about $200B, so this is around 2% of the overall budget. What's more, CA is currently generating about a $10B surplus (plus or minus a few billion depending on how you count it). The surplus is more than twice the Federal highway funds. The level of federal funding for highways is relatively small compared to state spending and the effects of the SALT cap.
As a lifelong Californian I have no issue whatsoever with money from rich states going to help poorer states. And certainly do not mind if more funds go to fund things like the interstate network in sparsely populated states. The value of these networks isn't just the linear feet of pavement in a given location, but the interconnectedness that the entire network provides. The whole is more than the sum of the parts.
From a policy perspective, the disproportionate allocation of funds is why we have an income tax and the 16th amendment to begin with. If a state is not getting the funds they need then, again, take it up with your elected representatives to do a better job of getting funding.