Well thats like asking me how many times should a man beat his wife.
The question is not how much is desirable, but rather what activities is it justified for government to be involved in?
Should it be involved in giving out $5k of someone else's money for every baby born?
Should it be involved in .... etc.
Then there is the question also of what
kind of taxes. Some kind of taxes are much more harmful than others though they may yield the same revenue. Compare payroll taxes to petrol taxes.
Then there is also another consideration i outlined before. That when government spends a dollar, it hasn't just costed society $1. You hear a lot of reports of TV like "Govt will spend $x of taxpayers money on XYZ". But that really doesn't show you how much it really costed society. Because to spend $1 of taxes you had to collect that dollar, people had to fill out forms which wastes their time, you had to set up a bureaucracy to administer the whole tax system, you distort people's incentives to work which reduces the overall wealth of society. People have worked how much this all adds up to. It come to $1.35 for each $1 that a government spends. So it costs society $1.35 for government to spend $1. So when you hear reports in news that the government will spend $x, just remind yourself that has costed society $1.35x .
There's another consideration also that I don't think that $1.35 incorporates and that is how well or how efficiently the government spends that $1. I'll quote Nobel Laureate Milton Friedman to illustrate:
"There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income."
Now in Australia, total taxes as a fraction of GDP is around 32% for the 2005-2006 fiscal year.
This phenomenon of corrupting influence of having the power to confiscate other people's money and spend it as you please, has not just suddenly been realized within the last 20 years. "Power corrupts; absolute power corrupts absolutely." - Lord Acton. It's been around for ages, and it comes down to the incentives that people face. If B is spending A's money on C, B is not going to be very careful regarding cost and value, compared to the situation where B would spend his own money, on himself.
It's a relatively broad topic and you would come across it if you study
[i]Public Choice Economics[/i] at University level.