Maybe I'm just misunderstanding, but you're talking as if the current system was consciously selected because of some inherent advantages it has over the alternatives. I don't think that's really true, and I would argue that the high marginal tax rates on low-income people are less the result of a careful analysis of trade-offs, and more the result of a flaw in the incentive structure for law-makers (on-budget costs look worse than off-budget costs).