"Business is leaving California in droves and these liberals haven't a care in the world !"

The blue-ribbon commission charged with overhauling California's tax system is heading for an ideological clash that could stall any meaningful recommendations to Gov. Arnold Schwarzenegger and the Legislature.

The commission, headed by Southern California businessman Gerald Parsky, was charged with reforming a revenue system that has been widely criticized for its volatile reliance on income taxes on high-income Californians and its disconnect from 21st century economic realities.

Schwarzenegger and legislative leaders have said they hope tax reform would smooth out the boom-and-bust cycle in state budgets that has resulted in huge deficits.

At Parsky's behest, the commission, which has been meeting since January, was moving toward a flat rate income tax system that would shift more of the burden to middle-income taxpayers, eliminating the corporate income tax and replacing the sales tax with a broader, European-style tax on all "net business receipts."

But liberals – those appointed by the Legislature – balked, and this weekend completed what they call the "blue plan" that would retain the progressivity of the current system and make a number of other changes, including removing Proposition 13's property tax limits from commercial property.