California has become such a basket case that serious reform proposals should be given consideration. Lately, there seems to have been a rash of them, including "A Blueprint to Renew California" from the Think Long Committee for California.

Think Long was created by Paris-born billionaire investor Nicolas Berggruen, who funded it with $20 million and recruited a board of other rich people, academics and faded politicos like former Assembly Speaker Willie Brown, former Gov. Gray Davis and financier and former Bush adviser Gerry Parsky.

Charging ex-politicians who played a large role in creating our present crisis with crafting a solution is a curious approach, and Think Long's "Blueprint" puts forth reform proposals that cover a range of issues such as education, regulation, taxation and the budget. Some make a good deal of sense, while others reflect a contradiction between citizen and government – especially when it comes to taxes.

While Think Long is right to urge that California's high personal income and sales tax rates be reduced, its proposal to extend the sales tax to those sectors of the California economy that have managed to escape the heavy hand of the taxman is punitive and destructive. That's taking one step forward and two steps back.

The purpose of taxation is to provide adequate revenue for government's legitimate functions, and should be designed to encourage, rather than dampen, economic growth. The state receives adequate revenues; the problem is it has grown far beyond its proper boundaries. Think Long gets it backward in seeking what amounts to a growth-inhibiting $10 billion tax increase to a bloated, wasteful state government that is profligate with the enormous revenues it already receives.

Even as it pushes to impose the sales tax on everyone from barbers to software consultants to construction contractors, Think Long makes a point of "retaining California's progressive tax structure," which punishes the most productive, creative and successful while fueling the volatility of state tax revenues. Last year, Gov. Arnold Schwarzenegger's tax reform commission – chaired by Think Long member Parsky – said it was folly that 50 percent of the state's income tax revenue comes from only 144,000 people. State finances can be dramatically impacted if just a few of those individuals leave or suffer economic reversals.

Who benefits by imposing the sales tax on services? Workers, entrepreneurs and taxpayers? Or government? I think the answer to that question is obvious, and men like Gerry Parsky and Eric Schmidt ought to know better.

So, while clinging to the progressivity they know fuels the up-and-down swings of state tax revenue, Think Long leaders want to make service providers less competitive by saddling them with the sales tax and sucking even more money out of the pockets of residents trying to get ahead in California's anemic economy – all while making no meaningful reduction in the size and scope of state government. This is "long thinking"?

It's a statement in itself that Think Long leads with an initiative to expand state taxes, rather than regulatory relief or pension reform. Let's suppose voters approve the Think Long tax hike and it generates the promised $10 billion in extra money for the state. Bitter experience teaches that this will have the paradoxical effect of relieving pressure for the kind of true budget and spending reform that is necessary. Anyone who doubts this need only recall the past decade of responding to uninterrupted budget deficits with Band-Aids and demands for tax increases. Does anyone believe that if the sales tax is imposed on untaxed sectors of the economy, the liberals who control state government – and are in turn controlled by the public employee unions – will then adopt the regulatory, budget, education and pension reforms even Think Long recognizes are necessary? Of course not; they'll spend the $10 billion and then demand more.

Doubtless the ostensibly Republican members of Think Long will attempt to sucker Republican legislators and leaders into supporting their plan as the only "responsible" or "realistic" alternative to straight-out tax increase proposals being floated by Gov. Jerry Brown and the unions.

Instead, Republicans should remain true to their principles and reject this destructive prescription. To do otherwise would weaken our already beleaguered state party and diminish any chance of appealing to independent and moderate Democratic voters attracted to our anti-tax message. The political obstacles facing California Republicans are daunting enough. Let's not compound them by blurring distinctions and lending our credibility to those who see higher taxes as the only path forward.

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Shawn Steel is the Republican national committeeman from California and a former chairman of the California Republican Party.

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