There are lots of talking heads in Washington and Wall Street that are certain that the economy is better off when dividends are taxed high as ordinary income, and capital gains are taxes preferentially low. Some of these people would like to see capital gains virtually untaxed.

They have it totally backward, of course. The only concession to capital gains that makes sense is to index the basis for inflation. Otherwise, speculative gains (for that is what capital gains are when you back out inflation) should get no special preference at all. In fact, IMHO all capital losses should be treated the same way we treat gambling losses - you can only use them to offset winings.

On the other hand, I would like to see corporate income tax payments essentially be transformed into a tax withholding that passes on to the shareholders along with their dividends.

I suspect that if these changes were made, we would return to a bias toward dividend income rather than capital gains, and there would be more pressure on corporate managements to perform consistently over the long haul, rather than play short-term games.