Uh it's Florida subsidizing New York. No state tax Wyoming subsidizing Connecticut. You need to work on your math a little more. This isn't about redistribution through benefits in your example.The subsidy is deducting state income taxes from federal taxable income. Hence- people from low state tax states,like Florida are subsidizing the careless spending and taxation of states like California and New York, both with profligate spending that has them teetering on bankruptcy. Why should I elect responsible state government to let an unlimited state tax exemption credit reduce the sting of wasteful state governments on their constituents. The deduction on state taxes is capped at $10,000.