Gov. Arnold Schwarzenegger in the past has favored a 6-12% flat income tax.  Though much of this comes from the recent budget crisis, there is a desire to simplify the tax code, close loopholes, and create greater transparency.  According to Schwarzenegger, with a simplified tax code there will be tremendous savings in the overhead of tax collection and enforcement.  Another potential benefit is less delinquent tax payers which in turn will lift tax revenues.

In addition to the positive changes described above, Schwarzenegger is expecting that a flat tax will largely spur investment by business and entrepreneurs who will now find themselves with additional cash.California politics have forced many businesses to leave the state over the past two decades due to unfavorable taxation. Experts however are predicting huge foreign investments in the field of automobiles, textiles and steel industries with the adoption of a flat tax in California.

Of course there are those who feel that the flat tax is not fair and a flat tax is a larger percent of income on the poor than the rich.  Several consumer groups have voiced their concerns on the grounds that a flat tax is another form of corporate welfare for big business.

California politics dictate that this will be extremely difficult to pass.  Schwarzenegger will not be running for reelection in 2010 and has everything to gain by promoting major reform in the California tax code.