However, we need to be more critical in assessing what is truly a need. Hence government does not need more money to balance its budgets or fund existing programs at present levels. By lowering the tax, people will take jobs, and the tax revenue collected by government will increase up to a certain point. There is overwhelming empirical evidence that many tax rates in the U.S. are still well above the revenue maximizing rate. These include the high marginal income tax rate, the capital gains tax rate, and the death tax, among others.
Government spending is well above the optimum level to maximize social welfare.
Many activities that have been done by government can be handled more efficiently and effectively by the private sector. Government programs, by their very nature, tend to engage in the abuses and inefficiencies that are associated with monopolies, and hence big government adds to the misery of society. Another reason given for taxing the Internet is that those retailers in states and localities that have a retail sales tax are put at a competitive disadvantage to those who sell over the Internet. The fact is that any retailer subject to a high sales tax is always at a competitive disadvantage to those who sell the same product in lower tax-rate jurisdictions. For example, very few mail-order retailers collect sales tax for sales they make in other states.