The US’s decline is of its own making, and I think it’s more due to its corrosive capitalism, not to its government — though the legislative gridlock caused by increasing partisanship between the president and the executive houses has had an effect for sure.
Your assertion that “Each dollar taken from the private sector in taxes reduces the economic power of the USA” is wrong, for a few reasons.
- First, taxes aren’t subtracted from GDP (the usual measure of “economic power); GDP is the sum of all goods and services produced in a country, which includes government output.
- Second, if you’re arguing that the money given up in taxes could be used for economic output, consider that you need to have tax-funded operations in government so that you have desirable things such as a state-funded police force (you don’t want private police forces enforcing their own versions of the law, because that limits law to those who can afford it and also raises the question of who polices the private police), state-funded health (else diseases spread because poor people can’t afford expensive health care), state-funded pensions (unless you want to throw your aged relatives out in the street), state-funded infrastructure (ever tried Kickstarter for a $50m bridge? Doesn’t work), and so on. You also want state-funded legislators and regulators, because you do want to be able to have the rule of law upheld, and you do want to make sure you’re not giving your baby milk that is poisonous because the factory couldn’t be bothered to check, say. (Lawsuits for damages in the latter case aren’t as meritorious as preventing the poisoning occurring.)
- Third, the private sector’s spending tends to make the US’s trade deficit worse (people buy imported TVs) whereas government spending is often required to be sourced from inside the country. And running a trade deficit isn’t a good thing if it can be avoided.
- Fourth, it’s not “the state v you”. If that’s really how you think, do try Somalia, which is pretty much as stateless as you could hope for. People who argue that All Taxes Are Bad tend, in my experience, to be living comfortable lives enabled by state-funded public goods (roads, doctors, hospitals, schools) but have been gripped by ideology which ignores the reality: there are places you could go in this world where you’d not have to worry about paying taxes to a government. But you’d have a lot more to worry about as a result.