The Post's editorial writers must have been in a literary mood when they tackled taxes {"Tip o' the Cap to Tax Deductions," Aug. 13}.

They term the administration's proposed restrictions on the deduction for state and local taxes a "metaphor." Metaphor for what? Sticking it to the states?

Over the last decade, the federal government slashed aid to states and cities. To compensate, state and local governments had to increase their own taxes. (States, unlike the federal government, have to balance their budgets.) Now the White House, searching for federal revenues, turns to a provision that would undermine the very taxes states and localities had to raise to make up for federal funding shortfalls! We have a word for this in New York: chutzpah.

After a decade of Reagan-Bush tax policy, nine out of 10 Americans shoulder a heavier federal tax burden. Only the most affluent 10 percent, benefiting from a drop in the top rate from 70 percent to 28 percent, is paying less.

The way to tax the rich is directly, through a higher top rate on their income. Capping the state and local deduction would simply penalize states with progressive taxes. It would make it tougher for already hard-pressed states to meet needs ignored or underfinanced by Washington, like education and law enforcement, and heighten counterproductive tax competition among states.

It's not just the 35 million who itemize deductions who are at risk. All citizens who rely on states, cities, counties and school districts for schools, roads, police and sanitation will suffer if the fiscal condition of state and local governments is further strained by the federal attack on deductibility.

The argument The Post offers against the deductibility status quo does not apply to the deduction for state and local taxes. The Post says it's unfair that federal tax deductions grant affluent taxpayers generous subsidies for items like home mortgages. But taxes paid to state and local governments are not for personal consumption. They are means of financing public services, especially for the poor and vulnerable.

Moreover, the deduction for state and local taxes is not a subsidy. It's a way to prevent households from being taxed twice on the same dollar. No amount of double talk can transform double taxation into sound policy.

The editorial suggests that "some" governors want to protect deductibility. The fact is, the National Governors' Association, representing all 50 governors, voted unanimously to oppose any restrictions on state and local deductibility. This is also the position of the nation's state legislatures, mayors, county officials, school boards, education advocacy groups and organized labor.

Let's tackle the federal deficit directly and stop playing games with the tax code. Double taxation is fundamentally wrong. The proposed cap on deductibility is a dunce's cap. MARIO M. CUOMO Governor, New York Albany