Here are a few interesting things I heard at today's NYU-UCLA Tax Policy Conference (organized around the theme of "100 years of the income tax," but covering a broad array of topics).
1) As David Kamin discussed, suppose we agree that federal income tax revenues will be relatively constant. Then distributional issues within the income tax will be more important on the bottom end of the income scale than on the top end, for reasons that I can illustrate with the following hypothetical.
Suppose a certain candidate for president wins the election, and enacts the following tax plan: Everyone in the "47 percent" group that paid no federal income taxes this year gets hit with a $1,000 federal income tax bill. We then bundle the amounts received into a number of $10 million checks, and hand these to the individuals who we have determined are the very wealthiest people in our society. (We start with the very richest and keep heading on down the income scale, until we run out of checks.)
[Quick, snarky aside: When you look at Romney's entire set of budget proposals (insofar as they can be discerned), including on the spending side such as Medicaid, this thought experiment is probably far less redistributive towards the top than what he is actually planning, even if one believed him about income tax revenue neutrality for the broader top bracket as a whole. No worries, however. Rawlsians sometimes talk about "maximin," but you get to a very different policy place if you believe, as it appears Romney does, in "maximax,"* accompanied by a dollop of "minimin."** But I digress.]
Seemingly, the headline item here is bundling big checks (in the form of income tax refunds) to give to very rich people. But the distributional impact is actually greater on the low end than on the high end, because losing $1,000 has a much greater impact on the life circumstances of a poor person than gaining $10 million has on those of a very rich person.
The takeaway here is that the tax system's effect on income distribution in society is likely to be more significant at the bottom of the income distribution than at the top, if you don't raise the issue of the level of tax revenue and how it is being used. Or to put it differently, if you are concerned about wealth concentration at the top, issues of tax rates and tax base design within a constant-revenue framework are probably not where you should place most of your chips. By contrast, it is fairly easy to have significant effects on the bottom, such as through items like the earned income tax credit and child tax credit that played significant roles - at one time, with Republican support - in creating the policies underlying the 47% pseudo-factoid.
2) Would an increase in the top rate tax hurt "job-creating entrepeneurs"? As Leonard Burman noted, to the limited extent it actually mattered, it might actually help those guys attract relative to others in the top bracket The entrepeneurs, as owner-employees, can effectively get expensing for their own capital-creating labor services if they underpay themselves. The relative tax preference for such activity is increased if you raise the top individual rate.
3) Why is the income tax marriage penalty so politically prominent today? In part, because, as Anne Alstott discussed, stable, long-term marriage (often with two earners) is statistically correlated with being high-income. So you have behavior that is arguably a tag for "ability" in the sense that we use it in the tax policy literature, and that is relatively inelastic, creating tax policy arguments in its favor - but also guaranteeing political controversiality, because (a) these are the people who have political clout, and (b) as Albert Hirschman might have put it, you're most likely to use voice when you aren't using exit.
*Maximax would presumably be a version of welfarism in which the only thing that matters is increasing the single best-off individual's welfare.
**Minimin would presumably be an inverted version of welfarism in which the only thing that matters is lowering the single worst-off individual's welfare.
UPDATE: A reader (my brother) suggests expanding on the notion of Romney as a philosopher. "Instead
of Rawls' 'veil of ignorance,' we would have Romney's 'veil of
arrogance,' the starting assumption with which you approach any
discussion of possible social arrangements is that you are the richest [and I would add worthiest]
person in the society being described."