... the high tax states have thriving economies and are already paying the lions share of federal taxes...
I'm not convinced the above statement is true, so I decided to actually dig up some data on this. Figuring out what counts as a high tax state is complex. For example CA has an early high top state income tax rate, but it doesn't kick in until your income is $1M/year, so the average californian pays less in income tax than the average oreganian, despite the top tax bracket being lower in in OR.
Anyway, so I've decided to look at total state and local income and property tax collected per capita for classifying states as high or low tax and total federal income taxes paid per capita for classifying states as paying the lion's share of federal taxes or not. I've also controlled for variation in cost of living across states using data from
here. If you'd like to see the unadjusted chart, it's
here.
Ignore delaware, that's an artifact of so many US based companies making the state their legal/tax home, but I didn't want to take it out because then someone would ask where it was.
As you can see, there is actually is a small amount correlation between state tax burden and contribution to federal income tax. However, I should also point out that most of the strength of this relatively weak correlation strength comes from five states (MN, NJ, MA, CT, & NY), and you don't see much of a trend at all in the 44 remaining states (since we also have to throw out delaware).
Tying this back to the main topic of this thread, if the republicans really do repeal the SALT tax exemptions, states on the right hand side of the graph are going to move up, while states on the left hand side of the graph will move down (as a result of the expanded standard deduction). Whether that is better or worse (or more or less fair) is left as an exercise to the reader.
As part of pulling this data together, I also plotted the state and federal tax burden as a percent of state GDP. It's not directly relevant to the discussion above, but
I'll link to it as well. The only thing that jumped out at me was that states like Maine and Vermont which pay lower absolute levels of state income/property taxes have some of the highest state tax burdens relative to their state GDP.