First, we need to greatly reduce (I prefer elimination) of corporate income taxes (especially for retained earnings). Second, we need to raise the cap gains/dividend/other rates to equal income tax rates (although with base broadening, the rates would come down so we should meet somewhere in the middle). What we have right now is a disincentive for the so-called job creators to actually invest in a business venture that may create jobs because both their income from it and the business income it generates will be taxed at 35% while they can invest instead in stocks and get a 15% rate on a similar expected rate of return (in other words, I would need to expect a 30% greater gain from the business than from a stock investment to get the same after tax income under today’s code). This simply is government not letting free markets work by selecting a winning form of income over other forms of income.

As to Francis’ last point, about trading higher marginal rates on millionaires for substantial reform of medicare et al, I would also take it, as we have shown over the last 30 years that it isn’t that hard to lower taxes, but that it is almost impossible to cut entitlement benefits. Having said that, the entitlement reform would have to be significant and linked to the taxes (ie voted on together). Once we solve the long-term entitlement funding issue and get the budget back towards balance, cutting taxes should be much easier (although as I stated above, I think we need major tax reform now, to get the free market back into play).