You forgot that wages have increased, thus the tax base has increased. When I paid 50 cents per gallon of gas, minimum wage was $2.65/hour. But minimum wage is now $7.25/hour (hasn't increased since 2009). So even if the tax rate remained static, tax revenues would be greatly increased. This is basic math, Eidolon. I'm surprised at your failure in comprehending this concept. You compounded your failure by noting that more people keep moving in, thus increasing the number of individuals paying taxes. Per your theory, the government will eventually take your whole paycheck (sounds like a particular grocery store chain), yet the problems will not have been solved. Theoretically, what will government do then? 

Do you understand the notion of tax brackets as they regard individual income tax? Do you understand that progressive scheme of taxation?