it doesn't have to be a government agency, but in an imperfect world with imperfect people that seems to be the most effective way to fund and maintain such an organization

Based on what real world example? Why would an organization subject to ever-changing political whims, staffed by employees with union protected jobs, and whose decisions are subject to every politician's pocket lobbyist be more trustworthy than one that lives and dies by its reputation?

Arthur Andersen messed up and paid the price. The bond-rating agencies were corrupted and are now paying the price. How many government agencies have been shut down due to corruption or incompetence? How many government agencies have increased their budgets and staff DESPITE their track-record of incompetence?

No human-built institution is perfect, public or private, but I'd prefer to put my trust in the one that depends on its reputation over one that depends on politics every time.

You are attempting to cherry-pick and only address part of the issue.

1. Whether spending increases or decreases depends where you are on the Laffer curve when you begin hiking the current level of taxation.

2. The point at which people cut spending is different for everyone. The moment you start increasing how much the government takes is the exact same moment one of those savers decides to cut back.

3. If all the government did was increase tax rates for earners that make 1m to 10m a year, they wouldn't collect enough revenue to stimulate anything. Your citation doesn't demonstrate a thing other than proper construction of straw into men.

And you still haven't addressed the other two significant costs of decreased investment and government handling "tax".

The government taking money from people who would save it and giving it to other people who would spend it, does stimulate the economy.

Nonsense. When you confiscate savings, the original savers tighten their belts and reduce their spending to compensate. Furthermore, funds once available for capital investment are reduced and credit constricts. Add to that the overhead of the government taking a "cut" for services rendered and you have largely canceled out any benefits you might get from the increased spending. The icing on the cake is that, in the long run, you end up with an even poorer economy because you have transferred assets from the more efficient to the less efficient.

TANSTAAFL.