> Here's my thinking: as a society, we should decide on what needs to be handled by the government. Defense, roads, pandemic response, scientific research, welfare, healthcare, whatever. Make your own list, we can all hash that out. Then we figure out how much that costs, then we figure out the best taxation method to pay for all of it.

We already do that. It's called politics. However, you seem to want a strictly regimented "waterfall" version of politics, but in reality it has to be continuously iterated and handle the complex interplay of many factors (like different people having mutually exclusive ideas of what the government should actually do).