what makes you think that higher tax rates will bring in more revenue?
That graph masks the differences that could be shown by zooming in on the relevant area. It looks like a flat line, but there is actually quite a bit of variance if one zooms in on the 15-22% range instead of scaling the chart from 0-100%. A difference of 1% is over a hundred billion dollars per year, so that alone could pay for the payroll tax cut (if we chose to make it permanent).
as you increase the incentive for high-performing individuals to maximize their tax avoidance rather than their productivity, that is what they will do. all you'll see from dramatically hiking rates is A) capital freezing up or fleeing and B) reduced growth from our previously attainable rate, as production is turned to tax avoidance.
Perhaps. But not enough to offset the additional tax revenue. Furthermore, not all income generated comes from "production," nor am I necessarily even sold on the classical economic belief that more production is always a good thing.
statically scored, which is bogus, but yes.
OK, the same could be said of a payroll tax cut.
no. it costs us $110 Bn this year. As employment increases (which, hopefully, it will eventually start doing), the losses increase.
...which would be offset by additional tax revenue from allowing the Bush tax cuts to expire. If we allow the Bush tax cuts to expire and extend the payroll tax cut, even if the estimates are wrong due to incorrect guesses about the future state of the economy, they'll at least be wrong in the same direction and therefore the one will offset the other.
But from a policy standpoint it will be less important to continue to extend the payroll tax cut once the economy recovers anyway. Budget deficits should be large during recessions, and balanced or in surplus during booms.
500 Bn over a 10 year period? that's almost half of the Supercommittees assigned task right there!
It would actually be $400 billion (if we didn't bridge the gap with the bipartisan consensus on taxing mortgage lenders for routing their loans through Fannie/Freddie). Which isn't really that much. $40 billion per year is less than the federal government spends on HUD, for example.
I fail to see why reducing wealth disparity should be a goal,
Because one marginal dollar of income increases the wellbeing of a poor person far more than it increases the wellbeing of a rich person. In fact, I question if it increases the wellbeing of a rich person at all.
but you are speaking policy, and what I am asking here is politics.
In terms of the politics, my guess is that you are correct that it will be hard to undo a payroll tax cut (particularly if it's made permanent so that raising it requires action rather than inaction). Any time there is a policy that is popular with either the voters or moneyed lobbyists, you can be sure that someone or everyone will latch onto it. This is actually the same reason why I am strongly opposed to another extension of the Bush tax cuts in full. Even though they might provide some small economic stimulus, I think that extending them increases the likelihood that they will eventually be made permanent. If I had more faith in politicians to let them expire once the economy recovers, I might be more inclined to support a temporary extension. With the payroll tax cut extension, I'm less concerned about that because they are more stimulative and I don't really mind if they are made permanent anyway.