Neolibertarianism recognizes the necessity of a rational governmental authority that performs the basic functions of maintaining law and order and providing for defense. Some argue for keeping some form of safety net as well. Its job is the protection of the individual rights of its citizens, and it exercises jurisdiction over the use of force in any sphere of activity. The logic behind this is that government is the entity charged with determining if a given use of force is justified in order to protect the rights of individual citizens from being infringed upon by others.
This does throw up the question of how the activities of the government would be financed, but does not justify the present day system of taxation, which has little justice or rationality behind it, as it is a method of forced payment that violates the fundamental rights of citizens.
Ideally, taxes should be replaced by voluntary payments to the government, which is only possible in a free society.
However, the issue will only be relevant once a society is truly capitalist and free.
The vital issue is to restrict government to its proper functions. With it limited to its key function, it is likely that voluntary support of the government will be as plausible as voluntary support of, say, the Red Cross is today. But however it is financed, a limited government will be a great improvement over the ever-expanding, increasingly oppressive monster we have today.
