[ryandrake]

> As a thought experiment, it'd be interesting to imagine how things would play out if each taxpayer could adjust little sliders on each category to allocate where they personally would like their taxes to go.

Change that to "allocation where they personally would like the entire budget to go." Otherwise, this is a recipe for an even worse power imbalance than we have today. The rich (who pay more taxes, and therefore whose sliders are more powerful) would have a greater influence on the budget than the poor, in your system.