When a government decides to spend money, there are essentially three ways it can get the money it spends.
First it can tax people. This is the fairest and most honest way to generate revenue for the government because the cost of all its programs are directly accounted for and paid by people who understand how much it costs. However, when the government grows too big, and has too much of a cost, people are likely to rebel against having such a large portion of their wealth taken from them. They'll start throwing tea parties and such. Furthermore, if you subscribe to the idea of The Laffer Curve, charging an exorbitantly high tax rate beyond a point will actually decrease the revenue the government takes in.
Read More