A state Senate committee yesterday passed a bill that would, according to The Advocate newspaper, delay a state income state break which would freeze the amount of federal excess itemized deductions state income tax filers can deduct at current levels through 2011.

More from the story:

The tax increase would allow the state to collect $118 million in taxes annually that otherwise would be returned to state taxpayers. The money would go toward reducing a $219 million budget hole in higher education.

[Gov.] Jindal said he wants to work with the Louisiana Legislature to mitigate higher education and health cuts. But he opposes 'anything that delays tax relief for our people,' the governor said.

'I don't think the right answer is to take money out of the pockets of Louisianans,' added Jindal, a Republican.

Speaker Tucker, a Terrytown Republican said, 'Most people will view it as a tax increase.'

Interestingly, the issue arises in the context of a new study that demonstrates that, while some state governments are attempting to close budget deficits through income tax increases, doing so ultimately hurts states. Primarily because, as the saying goes, people react to higher taxes by 'voting with their feet.'

According to Arthur Laffer and Stephen Moore, writing in The Wall Street Journal:

It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.

And the evidence that we discovered in our new study for the American Legislative Exchange Council, 'Rich States, Poor States', published in March, shows that Americans are more sensitive to high taxes than ever before.

As the article points out, however, in the long run there's also a real connection between the drag higher taxes have on a state's economy and the worsening fiscal problems of their state governments:

Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.

The whole report is informative and worth a look.