Tax rate increases and relevance to revenues and the economy

A March 2012 article in Journal of Economic Literature, by economists Saez, Slemrod, and Giertz: "The Elasticity of Taxable Income," provides an analysis of the economic effect of changes in marginal tax rates. It's a detailed analysis of data across many years.  I'll note two of several statements I found interesting:

1. "A tax system with a narrow base and many deductions and avoidance opportunities is likely to generate high elasticities and hence large efficiency costs. In that context, broadening the tax base and eliminating avoidance opportunities such as to reduce the elasticity is likely to be more efficient and more equitable than altering tax rates within the old system." (pages 4 - 5)
2. "there is compelling evidence of substantial responses of upper income taxpayers to changes in tax rates, at least in the short run. However, in all cases, the response is either due to short-term retiming or income shifting. There is no compelling evidence to date of real responses of upper income taxpayers to changes in tax rates." (page 35)

The second statement and the evidence (and more) from these economists and others should be part of the discussion of tax reform as well as the effect of keeping or not keeping any of the 2001/2003 tax cuts that expire at the end of 2012.

Also, the above should not be too surprising in that revenue estimates of the effect of letting the tax cuts expire or of increasing marginal tax rates, show that revenue is generated rather than lost. For example, see a Joint Committee on Taxation analysis of the effect of increasing marginal rates for various categories of high income individuals that was proposed in H.R. 3200 (111th Congress) (it would impose a surcharge on such individuals).

For more on this topic including several references to other literature on the effect of tax rate changes on behavior and the economy as well as debunking various statements about tax increases or changes, see an April 2012 report by Chye-Ching Huang of the Center for Budget and Policy Priorities - "Recent Studies Find Raising Taxes on High-Income Households Would Not Harm the Economy Policy Should Be Included in Balanced Deficit-Reduction Effort."

What do you think?  Why do we sometimes hear that a tax rate increase, particularly one on capital gains (such as is produced when you sell your stock at a gain) will harm the economy or harm job growth?  Have you seen job creation tied to the current 15% tax rate on capital gains?  Will selling Apple stock at a gain create jobs?