Treasury's Steve Mnuchin: We're sensitive to needs of high-tax states 8:12 AM ET Thu, 12 Oct 2017 | 02:43

A central element of the administration's tax reform plan would hit Democratic voters hardest.

Treasury Secretary Steven Mnuchin said Thursday the provision — eliminating the federal tax deduction for state and local taxes — remains an important part of the administration's reform plan.

"We can't have the federal government continue to subsidize the states," Mnuchin told CNBC's "Squawk Box." "That's a major loophole that we're trying to close in simplifying taxes."

Dropping the exemption would hit Democratic voters hardest, a CNBC analysis shows.

As congressional Republicans and the Trump administration attempt to overhaul the nation's tax code, much of the attention will be focused on changes that will end popular tax breaks to help pay for the revenue lost from lowering tax rates.

Among those in the plan's crosshairs is a long-standing provision that lets you deduct from your reported income the money you pay in state and local taxes on income, real estate or sales of big-ticket items.