Nevada Lt. Gov. Brian Krolicki has stated that California "makes my job easy sometimes."

As the chairman of the Nevada Commission on Economic Development, he has personally witnessed how California's taxation and regulation are excellent stimuli for our neighboring states. Nevada, which boasts no corporate tax and no personal income tax, has been wooing businesses to make a run for the border ---- in this case, the one between California and Nevada.

Quick to sweep businesses out of California, our Senate and Assembly Democrats pass judgment on Nevada for actively recruiting California businesses to their state. These are the same Democrats who imposed the single largest state tax increase in the history of our nation. If this were not bad enough, after basically stealing an additional $2,500 per year from the average hard-working California family, these same "representatives" again turned to California taxpayers for an additional $16 billion. This time, Californians voted 2 to 1 against Propositions 1A-E in May.

Recognizing that California needed an overhaul of its tax code to compete with our neighboring states, Gov. Arnold Schwarzenegger (probably the conservative one, not the liberal one) issued an executive order in July creating the Commission on the 21st Century Economy and charged it to find a way to simplify the tax code while promoting growth and decreasing tax revenue volatility.

The tax commission's 425-page report has some interesting proposals. It aims to expand the tax base while cutting personal income tax, sales tax and business tax. It recognizes that a tax policy that depends on the top 1 percent of California income tax payers (144,000 people) to raise 50 percent of the state's income tax revenues is likely to suffer from the same booms and busts as a normal business cycle.

Therefore, the commission proposed these changes:

-- Replace the punitive, progressive income tax (maximum of 10.55 percent) with two separate tax rates. The first tax rate would be 2.75 percent for individuals earning up to $28,000 per year and the second rate would be 6.5 percent for incomes above that amount.

-- Phase out the portion of the state's sales tax that contributes to the general fund.

-- Eliminate corporate taxes.

-- Replace the sales and corporate taxes with a new tax on the receipts of all California businesses. This new "net receipts tax" would be capped at 4 percent and is intended to capture revenue from services that are not currently taxed. It would be much broader than a standard sales tax and would encompass several other service sectors such as lawyers, engineers and business consultants.

This type of restructuring has a couple of advantages.

Its simplicity renders the Sacramento lobbyists impotent, thereby preventing tax favoritism based on the financial strength of any one industry. It can also curtail the emigration of California small businesses, 70 percent of which pay the current California personal income tax rate ---- an incentive to move a business elsewhere.

In the end, the tax commission's recommendations were intended to maintain revenue neutrality. The panel members even recommended creating the ever-elusive rainy-day fund. Unfortunately, proposals of this magnitude can always have unforeseen consequences. Hopefully, the commission applied its model to the last 10 years of data and compared the tax revenues of the current and proposed systems.

Critics are quick to point out that the tax commission's proposal will give the largest tax breaks to California's affluent. They seem to ignore that it is this same population that provides many of the jobs and the associated revenues our citizens and state depend on.

Faced with the fourth highest unemployment rate (12.2 percent), the third highest mortgage foreclosure rate and the biggest state budget deficits ever recorded by a state, one would think we would be rolling out the red carpet for job creators. Clearly, the current method of punishing the producers is highly flawed. Perhaps rewarding the successful entrepreneur will prove analogous to "catching more flies with honey than vinegar."

The California tax commission's report seems to deliver as requested.

What is needed now is an analysis of the rapid growth of California government compared with the overall state population. Take the following as the proverbial "food for thought": From 2000-07, California's population grew by a modest 7 percent. In comparison, government spending expanded 48 percent during the same period.

Revising our tax code is meaningless if we do nothing to control government growth. It's time to take a hard look at the public employee labor unions and the demands they impose on our society. The days of overpriced salaries, early retirement and wildly generous public pensions must come to an end.

Dr. GARY GONSALVES is a North San Diego County anesthesiologist and co-founder of Stop Taxing Us. Contact him at www.StopTaxingUs.com.