I am totally bookmarking the working paper from that tax the rich article. That kind of data on government spending is almost impossible to find on the Net. Their main point is dead on, too -- you totally ought to consider government spending whenever you consider taxes. First, like they say, because stuff like the EITC and tax breaks blur the line between spending and taxation. Second, because the government doesn't actually keep the money it taxes and it causes mistakes when you think of it that way. Third, it just makes sense. After the government robs Peter, it matters whether it pays Paul or gives the money back to Peter.
My perspective on the government just keeps growing. First there was the income tax. Then I realized Social Security mattered. Then, state and local taxes. Now, spending. And there's still more -- the government can shift huge amounts of money between poor and rich without taxing or spending, by saying, "It's OK to strip mine," or "Emergency rooms have to offer free care." I don't know if I'll ever see such a good paper looking into that, but I can dream.