Tax is harmful to the economy in that it, firstly, reduces capital accumulation of all kinds, public and private, and, secondly, misallocates or encourages the misallocation of capital throughout the economic sphere. The latter of these points is reasonably well understood, but the former is increasingly obscure. Indeed, it is a commonplace of casual left-leaning and popular discourse that private businesses under-invest because they are only interested in profit. This is a bizarre position, and not, I think, held by many economists, but it is a widespread and substantial part of public opinion. However, and notwithstanding its general currency, nothing could be further from the truth; it is the state that does not invest; it is the state that spends only for very short term gain (electoral popularity), and leaves the economy undercapitalised in the sense that complexity has not been created with a view to the creation of further complexity but only for consumption and immediate gratification.
Emphatically, the state does not invest for a return. Why? Because it need not do so. The tax base struggles autonomously and without encouragement to survive, so the state can leave all concern for the future to the will to live of these private individuals, and freely spend tax on the workforce on the public payroll, who in truth constitute the real body of the state, and on the electorate, so many of which, almost all, are in some degree state clients.
When the state appears to invest it is usually spending on a client sector of the population. And it is these clients who are the source of complaints of underinvestment from private wealth; private money does not expend largesse on the client, but truly invests for a return, in other words it deploys complexity in order to serve a requirement over the longer term, and thus secure a) a commitment of resources to reconstitute the investment and to add a thin layer of profit, which is a lien on the grown condition of the future economy (profit is truthfully one of the oddest phenomenon in commerce; debt undertaken by one party but to be paid by another).