A friend of mine proposed a policy awhile back that, while not entirely realistic, at least looks good on paper.
All levels of government should make their budgets public, to the point of sending monthly statements to citizens. (this part should be in play anyway)
Then, when tax time comes around, if a citizen feels it would be immoral to support a particular government program (say, military spending), then they could opt to not pay X-percentage of their state/federal tax, equal to the percentage being spent on the program with which they disagree.
Physical example:
Mr. Smith is a mid-20's, gainfully employed citizen, who feels Social Security will run dry long before he will be old enough to benefit, and therefore doesn't wish to contribute to someone else's retirement.
For the sake of example, let's say the federal government is spending 30% of its total budget on Social Security.
Under the proposed system, Mr. Smith could opt to not pay for Social Security, and either keep 30% of the money he would have sent to the federal government, or have 30% of his federal tax money returned to him.
In reality, people would simply opt out of EVERYTHING (which might be a good thing by itself), and the federal government would have NO money available.
Sad part of it is, these same people would still want libraries, food stamps, interstate highways, etc etc.
On the overall subject of taxation, the simple equation is this:
Higher taxes, more services.
Lower taxes, less services.
Pretty simple, even when those "services" are illegal wars perpetrated by capitalistic overlords who have absolutely no concern for the common man past his wallet.
If the average citizen doesn't care about road conditions, libraries, public transit, unemployment benefits, veteran/police/fire department pensions, etc etc., then by all means, cut taxes completely and put the most money in the hands of the citizenry.
However, Americans have for five or six generations been conditioned to feel entitled to more and more government-provided services, even as we whine about higher and higher taxes. Can't have the cake and eat it too.
The ideal, then, is a balancing act, holding the forces of consumer power and government-provided service in tension, trying to find the sweet spot in which the government provides necessary services AND the citizenry retains monetary power.