Earlier this year, the Baker Institute published a set of policy recommendations that aim to provide guidance to President Obama on a range of significant public policy issues, from energy to tax reform. Within each issue area, institute fellows and scholars offer an analytic overview of opportunities, challenges and possible solutions.

We are highlighting each of the essays in a series of posts in this space. This week, John Diamond, Edward A. and Hermena Hancock Kelly Fellow in Public Finance, and George Zodrow, Baker Institute Rice scholar and Allyn R. and Gladys M. Cline Chair of Economics at Rice University, present an outline for fundamental reform of both the individual and corporate income tax systems. In order to help solve the nation's looming fiscal problems and to prevent an economic recession in the near term, they recommend specific criteria for fundamental tax reform packages, including revenue neutrality, economic efficiency and a favorable environment for foreign investment.