yes, but the government spending from collected taxes is only a small fraction of the taxable economy and thus over time the money still accumulates in the coffers. It's only when money is stagnant (or exchanging without profit) that it becomes in accessible from taxes.

Removing the long term investment incentives (Long term capital gains) and introducing a penalty for not spending it during your life time (Estate tax) is how you ensure even those avenues of protection are gone.