The FTB is not a policy making body. It follows whatever laws the state legislature has enacted. It's no different than the employees of city agencies that are required to follow city laws and ordinances. They are not policy experts, although like all of us, most of them have their own uninformed opinions about policy they are willing to share with anyone who will listen.

There's nothing magical about a gross receipts tax. New Mexico uses one. Ohio recently scrapped its entire corporate tax system and adopted a gross receipts tax in its place. Los Angeles uses a gross receipts system as their primary business tax.

Michigan adopted a fairly sophisticated gross receipts system, but the business community organized and got the legislature to overturn it a few years later. Why? Because businesses hate the gross receipts tax since they can't play around with "net income" by using all sorts of fancy legal and accounting maneuvers.

California has had two recent commissions investigate revamping the state tax system. (One from around 2002/2003 and one from 2009/2010.) For those truly interested in tax policy, the reports can be found on the state's website, along with a wealth of tax policy material presented to both commissions. (One has a title of something like "tax policy for the 21st century" or some title equally pretentious.)

As someone pointed out, the city needs to wait until November 2012 to put a new business tax system before the voters unless it wants to try to get 2/3 voter approval, which isn't going to happen. (I think it's Prop 218 or its progeny that limits tax increases to 50%+1 of the voters only when the local legislature is up re-election. All other times require 2/3 voter appproval.) Thus cities and counties generally have only once every two years to pass a revenue measure with 50%+1 of the vote.