There is a certain logic to allowing the deduction of state income taxes (i.e., that you didn't really get that income) but this principle is at best haphazardly applied.
I see no particular logic for why the feds should necessarily subsidize any of the ways state gain revenue. I generally support fewer deductions and lower tax rates.
The principle used to be applied pretty well. Unfortunately, Congress has been eroding it as a way of raising income without changing the "tax rate".
Tax codes are used to raise revenue, manage the economy, and promote social policy.
The mortgage interest deduction is an example of promoting social policy. It is considered a general good for society, if more people own their home. This is considered so good, not only is there a deduction for mortgage interest, but the government has programs which provide loans at low interest, and insurance against defaults, so private banks can lend at lower rates.
This is the way government works. Tax codes always become more complicated over time because small adjustments are made, and people react to either take advantage of savings, or to avoid paying more. Eventually, a tax reform is needed.
Many years ago, I was a member of a gym which had a fairly shrewd group who worked out in the early morning. There was always a political discussion in the locker room. Something about being naked makes some men talkative. I was the only one who predicted Bill Clinton's first Presidential win. (It was Bush1's long forgotten Somalian war that tipped the scales)
Later, I was asked what I thought of Clinton's tax plan, which included tax increases. I said, "If it costs me have as much as Reagan's tax cut, I'll be okay."
They protested. Reagan's tax cut reduced the percentages and reduced the number of brackets. I knew that.
When Reagan took office, the tax code had been neatly tailored to reduce the taxes on middle income wage earners. Health insurance premiums were deductible(50%, If I recall). All loan interest, credit cards included, was deductible. I was able to take a nice deduction for the purchase of steel toed boots and other safety equipment, needed for my job.
All of that disappeared and was traded for a lower rate.
I told all my naked friends, "I've been doing my own taxes since I was in high school. I know when my taxes go up." They couldn't argue with that kind of evidence.
