If there were no taxes, how would we pay for hospitals, military defense and rescue workers? It would stink if a privatized fire fighter let your house burn because you didn’t pay for them. And what if a small town had only one station, and it begins over-pricing because they’re the only one in town?
Actually, many small towns today, including my own, utilize private fire fighters who are primarily volunteers. Each year, a community-support organization collects donations from bake sales, garage sales, barbeques and other fund-raising events to pay for their equipment. Almost everyone contributes as a customer, donor, volunteer, or organizer. Smaller communities would probably continue to utilize such strategies in a libertarian society.
In larger communities, homeowners could subscribe to one of multiple fire-fighting services. Mortgage companies and insurers would likely require such a subscription as part of their contract, as many do today. Thus, most people would carry such subscriptions, which would probably be about half of what we pay in taxes today.
Someone without a subscription could still call a fire-fighting service and get immediate service; they would simply pay more than a person with a subscription. In some cases, a service might put out a fire gratis simply as good-will advertising to other neighbors, who might decide to switch their subscription to a group they’ve seen in action.
You can find more examples of how fire protection and other important services would be paid for in a libertarian society in my short articles here and here.
I go into more detail in my book “Healing Our World,” available from the Advocates [latest 2003 edition] or as a free download [older 1992 edition] at my website.