I actually think we're more in agreement than you think. What government should be used for is a political issue. We may disagree on certain goals, or at least on the balance struck between competing goals, but tax policy is simply a means to those goals. But it is an economic means. That is, we should decide how big and powerful and intrusive a government we want, and then design tax policy to optimize economic performance within those constraints. For example, you might want government to guarantee that every household gets a chicken in their pot and a car in their garage (as Herbert Hoover promised during the 1928 campaign). To do so, the government must direct scarce resources to manufacturing of lots of cars and lots of chickens and then devise a tax policy that allows the economy to function well. Which ordinarily would mean preventing an acceleration of inflation generally and mitigating the distortions to the economy from the interference in the market for chickens and cars.
Warren Mosler, who is an economist I follow (I consider myself an acolyte, although I came to many of his conclusions independently), actually has an interesting take on taxes (which Randall Wray
summarized thusly):
"[T]he purpose of the tax is to create unemployment. That might sound a bit strange, but if we define unemployment as a situation in which job seekers want to work for money wages, then government can hire them by offering its currency. The tax frees resources from private use so that government can employ them in public use."
That is, the tax is the mechanism by which the government commandeers private sector resources for public purpose. However, for any given public purpose goal, you still want to design the tax policy to minimize the damage to the overall economy (or maximize the good, if in fact the public purpose was itself stimulating productivity growth).
Adding this to my lexicon...
