President Trump’s domestic agenda bill is spurring a debate over whether blue states are subsidizing red states.

After a successful pressure campaign from blue-state Republicans, the House version of Trump’s bill was amended to boost the state and local tax (SALT) deduction cap to $40,000.

The agreement was a major win for a handful of House Republicans from wealthier districts in blue states. The GOP lawmakers backing the larger cap argued their constituents tend to pay higher state and local taxes in large part due to high property values.

Before Trump’s 2017 tax bill, the constituents could write off their state and local taxes. That bill imposed a $10,000 ceiling, which the blue-state GOP lawmakers said unduly punished their area’s homeowners, who suddenly had a massively larger tax bill.

The SALT cap is controversial because it’s a tax break that benefits wealthier Americans in more affluent coastal states.

But those arguing that the higher ceiling is justified say their constituents already send in more to the federal government in taxes than they get out in public services. As a result, they argue their states are already effectively subsidizing state with lower property values that tend to get more in federal benefits than their constituents pay in taxes.

This has spurred a larger debate over who is subsidizing who when it comes to red and blue states.

Do blue states subsidize red states?

Democrats and blue-state Republicans defend the SALT deduction and advocate for a higher cap because their states often pay more in taxes than they get back in services.

They distinguish between “donor states” and “taker states” and argue that, as donors, they should be able to fully exempt their regional taxes from their federal tax bill.

“Most of these states … are high tax states that give more to the federal government than they get back in federal services. Most of the red states are taker states, states that get more from the federal government than they actually pay in taxes,” Rep. Tom Suozzi (D-N.Y.) said during a markup of the tax portion of the GOP bill earlier this month.

“It’s really not fair that we are being stuck with this cap on our state and........

© The Hill