While the governor and others are pushing for an increase in the income tax as a solution to the state’s financial problems, Think Long Committee participants at a PPIC forum in San Francisco last week stuck to the committee’s plan for tax reform: a tax on services.

Think Long chairman and benefactor, Nicolas Berggruen, committee advisor Nathan Gardels, and committee member Antonia Hernadez, president and CEO of California Community Foundation joined PPIC president, Mark Baldassare, for a discussion about the Think Long approach to California’s governance problems.

Berggruen noted that California is no longer a manufacturing and agricultural economy. Gardels said that of California’s $2 trillion economy, half is made up of services and technology.

Berggruen  stated that the problem with state finances are two-fold: not enough money and the revenue stream is too volatile.

He suggested Republicans and Democrats should reach a true compromise creating a service tax while lowering other tax rates to bring in adequate revenue, which he argued was a fair approach and would cause less volatility in tax collection that is experienced under the state’s current tax system.

California relies heavily on revenue produced by the income tax, which has swung wildly with the economy over the last decade. Berggruen argued that the state’s tax program should be based on the entire economy.

Hernandez said she was concerned how the poor would be affected under a service tax, but after listening to the discussion about taxes in the committee, “sock it to the rich just because they are rich doesn’t do it for me.”

Should any of the income tax initiatives make it to the ballot and pass, will that take the steam out of the reforms pushed by Think Long?

Which raises the question: Will the influential members of Think Long Committee oppose the income tax proposals because such a tax increase could undermine their effort for fiscal reform?

As I have commented here before, the Think Long economic policy is sound, but as in most other public matters, no matter how sound a policy, details and politics will determine the outcome.

Proposition 13 was raised in the discussion. Gardels responded that there were not extensive discussions about the property tax measure. “You don’t have to poll to know where the people stood on Prop 13.” He added, “Why take on a battle that has been made a million times before and lost.”

Berggruen said that the committee will take in criticism and suggestions on the committee’s proposals, learn from them, and modify the proposal before moving forward. He said it would take many years to achieve the changes proposed by Think Long but he was in it for the long run.

You can view the entire forum here.