National Review's editors would rather end the deduction for state and local taxes than increase rates.
Estimates suggest that eliminating this deduction would raise as much as $900 billion over ten years, though it may well turn out to be less as taxpayers modify their behavior in light of the new incentives. That won’t balance the budget with deficits running that much or more every single year, but it is nothing to turn the national nose up at, either: $900 billion would completely offset the estimated deficit for 2013. ...
We have 50 different states for a reason: Texas can have its low taxes and economic growth, and Connecticut can have its high taxes and lavishly subsidized abortions. But there is no reason for the federal government to subsidize Connecticut’s high taxes — or Texas’s crony-capitalist “economic development” schemes.
I agree with the editors. A shift in the top tax rate from 35 to 39 percent invites more deductions and gaming of the tax code. Before we increase rates, let's phase out every possible deduction. Subsidies for high taxation states, which often serve to ease the pain felt by said taxpayers, are an excellent place to start.
