While I benefited from that deduction, it never seemed fair that that the rest of the country had to kick in a tiny bit extra to give upper middle and above taxpayers a break.

Generally those states pay more than they receive in federal funds.

Nobody subsidizes many blue states, which in fact subsidize many poorer states (as Texas does as well).

I'm not sure how I feel about the concept, but one rationalization is that if a basic need, like road funding, is suitably taken care of at the state level by high state income taxes, then the state needs less federal funding. It's sort of a usage qualifier I guess.

In general, wealthy higher-tax states subsidize the poorer, lower-tax states.

The argument for the deduction, which has always existed, is to prevent people from being double taxed. A higher-tax state may tax its citizens to pay for infrastructure or services, whereas a low-tax state relies on the federal government to pay for the same stuff. There are tons of people in poverty in a lot of southern lower-tax states. Who do you think pays for all of the government services these people need?

The tax plan was specifically designed to harm blue states and to make residents of blue states pay and even higher, even less balanced share of tax receipts in the country.

The cynic would argue that those same states also tend to pay into the federal government disproportionately. "Why should we be subsidising states like Alabama (who can't even be bothered to educate their populations) without receiving any benefit?"

One practical concern is that it's a lot easier for a state to implement something like single-payer health care if they can pay for it through state taxes that are exempt from federal taxes.

Otherwise, they're competing with employer-provided health insurance, which is already tax-exempt. That gives employer-provided insurance a huge artificial advantage and makes single-payer a lot more expensive in comparison.

Why should you pay federal taxes on state taxes? Consider that it's long been a complaint that it's "double taxation" to pay individual taxes on dividends which already got taxed at the corporate level. Imagine if, on top of that, you got taxed on the quantity that was paid in corporate taxes, that you didn't even receive. I imagine quite a lot of outrage if liberals proposed that, because it goes even beyond what is already an intuitively unfair situation to a lot of people.