Your statement, "by spending $1 to provide a service to a group of people, you increase the size of the economy, and consequently the tax base in that area, by

Your statement, "by spending $1 to provide a service to a group of people, you increase the size of the economy, and consequently the tax base in that area, by more than $1," even if it were true, is too broad: it applies to services which pay for themselves as well as those that don't. It's not an argument for why government should overcharge city folk to pay for services for country folk.