As nice as it may be to think everybody's decisions are independent of others, the reality is people's decisions are influenced by societal norms. The more siblings that have sex, the more likely it is other siblings will find it acceptable to have sex, which increases the risks of inbred children, which will place a burden on society to care for them. Since inbred chidren will likely place a burden on society, there is a much stronger argument for regulating incest compared to regulating other types of "non-normal" sexual behavior.
While your argument that the reduction of the legal ramifications will lead to more incest is certainly correct, it will not lead to a lot more. First off the social taboo will not be so easily broken down, and then you have to factor in that we are biologically programed to not be sexually attracted to people we have a sibling bond to. There are societies today with out legal restrictions on incestuous relationships and we don't see a lot of it even in those societies. So from that we can infer that we would not see a large increase in it here either.
But, we will see some increase. Is that a strong enough argument to justify it being outlawed? I don't think so. The odds of birth defects from incest is actually quite low. It does not really become a problem until, as someone else pointed out, you have several generations of incestuous relationships building up on each other that you start to see any significant increase in birth defects. We should also remember that these birth defects are caused by a concentration of bad alleles, not the generation of new alleles. That means that most of the birth defects would still be occurring, just in a more spread out population. So, it does not create a greater burden on society, only a more compact one.