Well, you’d have a bigger disagreement with Newt’s policy then because he is eliminating the capital gains tax entirely (not sure if that’s just the “long-term” cap gains tax or if the time distinction goes away). You have to believe that the cap gains tax has a direct relationship to spurring on investment and building the economy in order to believe that’s the right policy. I haven’t studied the issue in great depth to be able to argue the case one way or another. But for a long time our long-term cap gains tax has been intentionally lower than the income tax, that’s for sure.
I do disagree on the cap gains tax, but I consider it minor compared to the other issue of allowing deductions and credits to create swaths of tax freeloaders.
Taxes on capital gains and dividends is bad mostly because it amounts to double taxation — a tax on the corporate profits already reduces the value of the shares and therefor a tax on the shareholders profits amounts to double taxation.
Personally, I’d completely eliminate the corporate income tax and the employer-side payroll tax. I’d replace them with a 10% tax on payroll costs, including the embedded labor costs of imports ala Cain. Hence the corporate profits would not be taxed ... until they landed in a shareholder’s pocket as capital gains or dividends. So I would eliminate the double taxation, just as Newt does, but it would also eliminate all the overhead of tax compliance and lobbying which a simple corporate rate cut does not accomplish.