SALT is not a tax credit (you won't get $5,000 back), it is a deduction which means the $5,000 is not taxed, because it was already used to pay a tax.
As a hypothetical, imagine 1 state which has very low taxes, say 5k on 100k income and does not provide very many services requiring the citizens to use post income tax money on all the goods and services they require such as rent, food, and healthcare. Now imagine another state which has super high taxes, say 40k on 100k of income, but the state massively subsidies their rent, food, gives them completely free healthcare and such.
Why should the person in the high tax state get to deduct the state and local taxes used to pay for similar services as the low tax one who has to pay for it with post federal income tax money?
To put it in more economic terms, SALT deductions incentivize state and local governments to increase taxes and spending to the point that the marginal utility of $1 provided by the government to citizens to equal the marginal cost of citizens taxes which include the SALT deductions or (1 / (1 - citizens marginal federal income tax rate)).
That literally creates waste because it incentivizes states and local governments to increase taxes to the point where citizens are seeing equal benefits with overall tax burdens at the cost of reducing the federal governments budget which ironically then encourages them to increase taxes to make up for it which then lowers the denominator in the states marginal utility to overall tax burden calculation in a positive feedback loop.
They are complementing the federal government so it doesn't have to provide these services.
If federal government would take care of everything and this was some extra service then I would agree with you, but it isn't.
And citizens in high tax states with high benefits that only benefit the local population get to reduce their federal tax burden with SALT deductions that others in the country don't benefit from.
Apparently I have to get more hypothetical, imagine 49 states introduce a 100% income tax but with that tax revenue, they give free rent, free food, free healthcare, free netflix, the works. With unlimited SALT deductions all of their income would go to the state governments and the 1 last state would be covering basically the entire federal budget (they get some from other things like corporate taxes).
Obviously totally unrealistic but the point is that increases in state and local taxes with SALT deductions benefit the state and local population at the expense of the federal governments tax revenue.
You overestimate how difficult this would be for the vast majority of people.
> imagine 49 states introduce a 100% income tax...
So your solution is to ask the citizens of states with 100% tax rates to pay > 100% of their income in taxes? How would this work?