The first big fight of the Republican effort to overhaul the federal tax code is already brewing: what to do about the state and local tax deduction. The policy framework released by the "Big Six" suggests they'd like to see it go. The map below, adapted from WalletHub, shows the average state and local tax burden in each state, a rough proxy for the pressure itemizers will put on their elected officials to defend the break.
Unsurprisingly, the biggest burdens are borne by blue-state taxpayers, so Republicans shouldn't have any problem ditching the deduction, right? Things aren't quite that simple. Take four high-tax states that went for Clinton in 2016: New York (12.94% average burden) sends nine Republicans to the U.S. House of Representatives; Minnesota (10.24%) sends three; New Jersey (10.14%) five; Illinois (10.00%) seven. That's a big enough contingent to cancel the GOP's majority right there. And we haven't even mentioned California: 14 Republican representatives, 9.52% average state and local tax burden. (For more, see Trump's Tax Reform.)
So why not just keep the deduction? Because, according to the Tax Policy Center, getting rid of it will save the Treasury $3.6 trillion over the next two decades. Give that up, and the tax overhaul as currently proposed could put the federal government $9.3 trillion in the red by 2037.