Now that the Governor has proposed a special session to deal with the state's fiscal crisis, the California GOP faces few choices.  They can (a) hunker down and circle the wagons against tax increases (the usual position), (b) cave in to increase taxes (using some termed-out scapegoat), or (c) show some fiscal leadership that might help reverse its fortunes.

California's GOP is fast approaching irrelevancy.  While the GOP has barely held off the Democrat party from achieving the two-thirds majority necessary to raise taxes and wreak economic destruction unchecked, the legislature's failure to deal with our fiscal crisis makes it seem more likely that the GOP will elect handpicked scapegoats to "cross the aisle" in "bipartisan" fashion and vote to raise taxes.  Given the GOP's tattered credentials for fiscal responsibility, this option would probably make the state and the GOP worse off.

The flat tax may be a way to help restore the GOP's tarnished fiscal credentials by rescuing state finances.  Economist Arthur Laffer, for one, has long proposed the flat tax as a means of repairing California's finances.  In a 2004 Heritage Foundation article, Laffer discusses his flat tax proposal.  Laffer's analysis indicates that a broad-based low flat tax rate would generate greater tax revenues.  The flat tax would also place some needed democratic checks on California's dysfunctional spending habits.

Laffer's analysis shows that his flat tax proposal would produce greater revenues than tax increases.  Laffer is famous for the Laffer Curve theory, that raising tax rates ultimately results in lower tax revenues by reducing the tax base (because the economic effect of tax increases negatively impacts work, output, and employment).  He shows empirical evidence how both the Kennedy and Reagan tax cuts resulted in greater tax revenues.  Laffer demonstrates how California tax increases have produced lower (not higher) tax revenues. 

Laffer's flat tax proposal would also place some needed democratic checks on California's dysfunctional spending habits.  California's fiscal crises are worsened by a tax system that is irrational and very progressive, resulting in dependency on the success (or failure) of the state's top wage earners.  This dependency causes revenues to swing wildly between boom and bust.  Consequently, irresponsible legislators ramp up spending wildly in boom times, but are unwilling to cut during busts (a problem worsened by programmed spending.) 

Worst of all, it is problematic and troubling that many tax payers support expanded government, so long as someone else is paying for it.  With the flat tax, voters and taxpayers can decide how big their government should be, knowing that they will pay for their share of it.

Is it risky for the GOP to push for a flat tax?  Perhaps.  But it is also risky to pursue the same failed strategies that are eroding the GOP base. Perhaps, it is time for the GOP to lead, follow, or get out of the way.