I don't know what the potential effects will be, of course, but I suspect that the motives for the changes were not to "help the country" and were instead to achieve some political ends.
Again I don't disagree with you here. It's pretty clear the motivation for capping salt deductions in this particular bill was to find a way to raise taxes on individuals (without calling it a tax increase) to partially offset the cost of the big cut to the corporate tax rate. I don't think raising taxes on individuals to pay for taxes on companies is a good idea regardless of the mechanism you use to do it.
1) Not only do I not think that federal tax payments are the only way a person, place or population contributes to the national well-being, but I don't think I've even heard someone imply that before.
And I'm not saying that's the only way a person place or population contributions to the national well-being. But so far, unless I've missed something, it's the only example you've put forward of people in Massachusetts, Connecticut, New Jersey, and New York doing more than their fair share.
If we put aside federal tax payments per capita, are there other specific ways that you feel like people in Massachusetts, Connecticut, New Jersey, and New York contribute more than their fair share to national well being?
2) Looking at only the states as states loses the granularity of considering the state effects on individuals, regardless of the overall tax levels within the state. Take California, which likely has the biggest number of state and federal "high" taxpayers, regardless of what the overall per capita amounts may be.
Indeed California likely does have the most high income taxpayers as it has the most people of any state in the union. But if your argument is just that "high" tax payers currently pay too much tax regardless of state, then we could just cut the top marginal federal income tax rate, and this would provide an equal benefit to "high" taxpayers whether they live in New York, California, or Mississippi.
Having said that, personally I think our tax code needs to be MORE progressive, not less progressive so I would not be in favor of cutting the top marginal tax rate, and I wish the current tax bill hadn't done so.
3) Yes, I'm optimistic about the benefits of decreasing barriers to people moving to where they can be most productive.
I agree with this statement. However, it's not clear to me 1) that there is evidence that when new people move specifically to high tax states they become more productive. Completely arbitrarily, a computer programmer in Mississippi (low SALT taxes per capita) can probably increase they productivity a lot more by moving to California (about average SALT taxes per capita) than to Connecticut (some of the highest SALT taxes per capita) and 2) that differences in state tax rates are a significant barrier to migration with or without the ability to deduct those taxes on your federal taxes.
f the rules change, people will make different decisions than they would have made under the status quo. I wonder, as one example, with the increasing ease of telecommuting, if a policy change that exacerbates the financial differences between locations will cause more people to opt out of being at headquarters, and whether that will suppress the benefits of network effects. Or will it put upward pressure on salaries in areas that are already HCOL, beyond the equilibrium that had existed between those places and the rest of the country?
Alternatively, if we see an increase in telecommuting across state lines it could allow people to earn the same salaries in lower cost of living locations giving them more disposable income and creating more economic activity than when they live in locations where more of their total income goes to rent. More people telecommuting would also put downward pressure on real estate prices and rents in high cost of living locations, which would again free up more disposable income which might be either saved (good for the individual) or spent on things which stimulate more economic activity (good for the economy as a whole).
As a rule of thumb (although there are plenty of exceptions), the fewer economic distortions you can introduce with a tax code that raises the same total amount of revenue, the better society and individuals end up being in the end.