This discussion can't occur without talking about the services themselves. I contend that government is the least efficient way to deliver services, and should only be used as an absolute last resort and to the absolute minimum extent. The goal should be to minimize the involuntary seizing of people's property to the maximum possible extent, not discuss what level is "fair".

So what is the minimum required services? Those needed to provide rule of law (protection of life, liberty and property) and common goods that are impossible to provide in any other way (such as defense). Yes, I realize that the common good thing is a slippery slope.

So, to answer directly:

Should people pay taxes? Only where it is absolutely necessary to protect life, liberty and property, and never at the disproportionate expense of other people's life, liberty and property.

At what level? Always at the absolute minimum possible level.

Should government services be based on tax revenue or vice versa? The service comes first, assuming it is justified within those very strict criteria, then the necessary revenue collected. However, the service should meet the requirement of being absolutely necessary and impossible to provide another way. I am advocating the ABSOLUTE MINIMUM GOVERNMENT POSSIBLE, just like our Founding Fathers did in the USA.

Should people at all income levels be taxed at the same rate? I don't care. The government our Founders had in mind, a Libertarian Republic, could be funded easily by small import duties, use fees, or whatever. Income tax is a tiny fraction of our government budget even today. As Ron Paul likes to point out, if we went back to the size of government in 2000, we could eliminate the income tax entirely.

Should health insurance be taxed at all/at the same rate? No. A Libertarian Republic, which our system is supposed to be, does not engage in central planning which uses tax code to encourage certain choices by citizens (whether to buy health insurance and what kind). A Libertarian Republic allows people to make these decisions as they see fit, without reward or punishment by the central planners.

Now, clearly this is my opinion. And I know we disagree on this point. You are a central planner: one who sees the role of government to make life better for everyone. I am a classic liberal, who sees making life better as *necessarily* up to the individual, because they have to define for themselves what "better" means. The role of government, in my opinion, is to maximize the freedom of individuals to the maximum possible extent in pursuing those goals. While we disagree, it is very clear that the founders of our system were much more aligned with my view. They were very outspoken in their opposition to things like a central bank, fiat money, taxation, all of which required constitutional amendments to make happen.

I also think you're very smart, and I like you, so none of this is personal for me. You have legitimate concerns and I agree with most of them. I just don't think the government can solve these things, and they have demonstrated that repeatedly throughout history. Government is not to be trusted. It is dishonest, corrupt, greedy, and self-serving. Our system acknowledges this, and was intended to keep the influence of government as small as possible.

Consider our current predicament -- the near destruction of the financial system (which may yet occur). What almost nobody will admit is this was entirely caused by government interference. Government agencies recklessly pumped money into the economy for the benefit of their cronies on Wall Street and at the behest of politicians who saw easy re-election during the boom. The inevitable bust was someone else's problem. Most importantly, this boom would not have been possible with a legitimate ("hard"), commodity-based money. Central, fractional-reserve banking (another creation of the government) caused this crisis. Greedy people in the free market did what any rational person would do when offered essentially free money -- they borrowed and speculated. But the government itself created the conditions that allowed this to occur. Now people think we need more regulation to stop this kind of thing. Insanity! What we need is an objective standard for currency, completely beyond the power of politicians and Wall Street cronies. The Founding Fathers warned us about central banking, because they had seen this all before.

That's just one of hundreds of examples, though it's probably the most poignant one because it's going to land this country, and possibly the entire Western world in a gigantic depression.

Edit: PS, free markets are greedy too. The problem with greedy governments is there is no alternative. The market mechanism provides alternatives. I'm not talking about the crony capitalism we've had for at least 100 years. I'm talking about a actual free market.