– Business taxes. The state would eliminate the corporation tax immediately in 2012. It would phase out the 5 percent state sales tax share from 2012 to 2016. Retailers would still charge sales taxes that pay for local governments.

To make up for the loss of corporation and sales tax revenue, the state would install a new business net receipts tax, essentially a value-added tax that firms doing business in California would pay on all revenues minus capital expenditures. The proposed rate is 4.2 percent, lower than the current corporation and sales tax rates. Businesses with less than $500,000 in revenues or $250,000 in tax liabilities would be exempt.

This tax would be phased in over five years, starting at 2 percent in 2012.

Gov. Arnold Schwarzenegger-appointed commissioner John Cogan, a Hoover Institution fellow, and Democratic-appointed commissioner Christopher Edley, dean of the UC Berkeley School of Law, issued a joint memo to their colleagues supporting the plan. They do note that the plan will require subsequent review in the Legislature, despite Schwarzenegger’s insistence that lawmakers consider it on an “up or down” vote without any changes.

“We are confident that the tax package is the right course for California,” they wrote. “We also recognize that the BNRT (business net receipts tax) represents an extraordinary change in California’s tax code. A tax change of this magnitude should only occur after the proposal has been fully vetted and all of its ramifications have been fully assessed by the Legislature and the governor and the public.”

– Other ideas. The commission is still working on a constitutional amendment to create a strong rainy-day fund. Former Democratic Assemblyman Fred Keeley said his carbon tax proposal remains on the table.