The above analysis ignores the critical fact that a high tax rate in one time period lowers the taxable base in all future time periods. Tax policy should not be conducted to maximize revenue in one time period, but rather a Rahn curve maximum should be targeted, to maximize growth of the tax base for all future time periods. Ultimately tax revenue is maximized by maximizing the long term tax base, even though the true goal of such growth is citizen well being, not tax revenue.

Michael while I agree completely that individual returns are better outside of Social Security, the positive results are poorly "framed", when considering behavioral economics. Your article positions Social Security (no risk) against "the market" (high perceived risk). Better to frame it as Social Security (questionable future) against a basket of "no risk" securities with better payouts. If these "no risk" securities were to fail, there would be no money for the federal government to pay Social Security.

Jerry: You seem to attract a lot of junk comments. I hope you will not consider this in that category. You asked for ideas: Incremental change will not work, so we need a plan to transition out of the current morass over a period of time, during which we eliminate entitlement commitments and personal dependency on government programs. While this may take a generation, we must start now. The 10-25 Plan is a compromise solution that should be acceptable to left and right, because it provides a "safety-net", while cutting out bureaucracy and political manipulation. The 10-25 Plan is described in detail in my book: "Fixing Everything". I will be happy to send you a copy, but the first 3 chapters are available free on Amazon.com.

While I agree about Goolsbee's motives, I have to disagree about future revenues relative to GDP. First, Hauser's Law states that regardless of tax rates, revenues stay in the 19.5% range, because individuals modify their behavior to avoid high tax rates. Second, because GDP is the divisor, and GDP may well be inflated as a tool to measure economic growth; revenue to GDP will be lower than if GDP were a legitimate measuring stick. Revenue to GDP for 2009 was at a historic low of 14.8%, and 14.9% for 2010. This so far out of the norm that something stinks.

A recession occurs at the bottom of a "business" cycle. The way out of a recession is to encourage new investment from the 75% of the economy represented by business. Increasing tax rates on the top 1% discourages investment. Because spending by government is politically driven, any increase in tax revenue will be misallocated and do nothing to get business out of its slump. Keynes certainly discouraged the raising of taxes during a recession. The idea that the wealthy should be taxed at higher rates has no economic justification, only political.

Michael: Big fan, but it would have been helpful to provide the name of the study, which is "A Deeper Look at Income Inequality".

Daniel: Thanks for the good article and the videos. I would like to point out a minor flaw in the presentation, but a major gap in current tax strategy: The Laffer Curve has little impact on capital gains tax revenues. The far greater impact comes from asset revaluation. Whereas income tax revenues are calculated on net income, capital gains taxes are based on far more variable "accumulated capital gains", which can be wiped out by minor changes in stock prices. Even a 5% increase could drive down prices enough to wipe out accumulated gains, which are a small subset of stock value, whereas Laffer Curve analysis might forecast a slight tax revenue increase going from 15% to 20%.

Until recently, Germany and France tracked together. Your article implies that recent divergence is a result of French problems. I would contend that a more important factor is the German status as number one safe-haven. When yield is no longer the determining factor in bond selection, you do not pick the second best safe-haven.

Regarding Romney's willingness to compromise on economic conservative ideals, I believe that conservative majorities in both houses will allow him to govern far more conservatively that many are projecting. When he was governor of MA, he had to deal with a far different situation. Romney-care would have been much worse without his mitigating influence.

As a Massachusetts conservative, I believe that Mitt is far better than any of the other candidates available. However, his biggest flaw (similar to Gingrich) is that he believes government can be fixed, if effectively managed. He is also willing to compromise. The problem is that any compromise on limited government means more government. Over time, multiple compromises presented us with the current bloated government. Regardless, we do not know what crisis the future will bring, and there will probably be many. I'd rather have Mitt in the White House when a crisis hits than any of the other contenders. Regarding his religion: In the general election any attempt to use Romney's religion will open the door on Obama's "religion".