A large portion of economic activity depends on the use of contracts. Like for instance if you were too start a new job, normally you have a contract stating what your responsibilities are and how much you will be paid for your labor. If there's no way to enforce a contract like that, then there is no way to ensure that you will end up getting paid for your labor. Without that guarantee, many would decide it is not worth the risk to work for someone else. If these contracts are not enforceable, the party who is obligated to do something in the future might decide then that he doesn't feel like it. Since both parties know this, they would decide not to enter into such an agreement and the economy as a whole would suffer. (Effects of Taxation, pg78).
Having a working court system, military, and police force provides a large economic benefit to a society. However it is expensive for a government to provide such services, so they have to collect taxes from their citizens to pay for these systems. So naturally a society with some taxation that provides these services will have a much higher level of economic growth than a society with no taxation along with no police force or court system. An increase in taxes can lead to larger economic growth, if it is used to pay for one of these services. This isn't a law of economics and won't always hold true, not in every case expanding the police force or hiring more judges will lead to greater economic activity. In an area which already has many police officers and little crime it would be stupid and there would be no benefit from hiring another officer. Society in this case would be better off cutting taxes in that area since there is already an overabundance. If your armed forces are already large enough then any additional spending would only drag down the economic growth. Spending money on these three areas in moderation will promote economic development.