The majority of Americans want lower taxes and tax reform. Unaccountably, they are also OK with spending ten times more per capita on their military then other industrialized countries do. Huge expenditures on the national "security" apparatus, which includes the NSA, CIA, and Homeland Security, doesn't seem to bother them much. They don't like what these agencies do, but you never hear them advocating their budgets be cut.
Furthermore, the American people seem to favor, more and more, a uniform, non-progressive income tax structure such as might be provided by a "flat tax". They also continue to support taxing income earned on capital at a lower rate than income earned on labor, having been convinced by their politicians that making the wealthy wealthier will somehow help the "little guy" keep a job.
During Reagan's presidency, spurred by enthusiasm for "supply-side" economic reform, the progressive income tax structure was substantially flattened. Top rates were much reduced, and the rate of the lowest bracket raised. These policies failed to produce the intended results, but did initiate a shift of real income from lower wage earners toward those at the top. Today, Americans are critical of the dramatically skewed income distribution in the U.S.; one more typical of a developing country than a modern industrialized one. But oddly, despite decrying the income skew, they continue to support and champion the policies that contributed to it, and Reagan remains one of the countries most popular Presidents.
The American psyche is schizophrenic. Americans want lower taxes, and a less skewed income distribution, while they also want expenditures and policies that are incompatible with these goals. This schizophrenia is nowhere more evident than in today's Tea Party movement.
With regard to your question: " When tax revenues are raised do the people make up the difference by pulling out their credit cards and borrowing on their home equity?", I would say that American tax structure combined with the expenditure choices Americans have made, rather than high taxes, per se, is responsible for lower wage Americans living on credit. As real incomes in the middle class declined, the shortfall was made up by borrowing in an effort to maintain their standard of living. Yet many of the same Americans affected the worst by declining real incomes opposed, and still oppose, tax policy that would have slowed or even prevented decline of real wages in the lower classes. (There are other factors too of course.)
Were Marie Antoinette alive to day, instead of saying: "let them eat cake", she would say, "let them eat credit."
