The basic idea of minarchism is that the government should be expressly small and limited to the defence of person and property of those within the territorial dominion of the government. This generally implies that the government's services be limited to the provision of police, courts and defence. Most minarchists accept, or at least claim to accept, the principle of the non-initiation of aggression. They seek to attain a government that functions only for defensive purposes, while completely abstaining from initiating aggression. But if the minarchist sincerely does favour the principle of the non-initiation of aggression, they are contradicting their own ethical premise in supporting the existence of a government in the first place. For how are even these limited defensive services to be payed for? Most minarchists favour some limited form of taxation.
The statement that taxation is theft may be shocking to many people, even libertarian minarchists. But it is undeniable. Would the act of me giving my wallet to a robber be a voluntary act of charity? Clearly not. The only reason the robber's victim hands them the wallet is because they are threatened with force in some way. The robber may have a gun to your head or a knife to your throat. It is an action done under the threat of force, and is therefore coerced. An important point that this brings out is that, while the initiation of force is wrong, the threat of the initiation of force is equally a problem. Taxation works no differently than our robbery scenario. While it is true that members of the government do not initially come to one's home to directly take their money, the money is given under the threat that this will happen if they do not pay up. And if one does not pay up, eventually this very scenario will play out. You will be tracked down and the legal authorities will eventually come to your home expecting payment. And if you continue to resist, down the line you will be shot. So let's not be fooled by the idea that the state merely threatens you with force without actually using it. Force will be used against you at some point down the line if you do not comply.
Therefore, taxation inherently violates the non-aggression principle. It would be nonsensical to claim that a high degree of taxation is bad, but a low degree of taxation is good or necessary. If the initiation of aggression and the threat thereof is ethically unjustifiable, then no level of taxation can be rationally defended. A common objection is that one could simply move. But if I truly have property rights, then I should be able to keep my property and still not pay and not receive the services. Otherwise, you must initiate force against me, or at least threaten to do so, in order to make me pay the taxes. If I wish to stop patronising McDonalds, I am not forced to move. I can just stop going there and still keep my home. The fact that my only alternative to paying my taxes is to move merely underscores that the state is claiming control over my home or land property. This shows the state to be a coercive territorial monopoly, which we will address later. In either case, this line of argument, what may be called the "love it or leave it" argument in favour of the state, assumes precisely what it is trying to prove: namely, that the state legitimately controls the territory.
Some minarchists may try to get around the ethical problems inherent in taxation by advocating a government funded entirely through tariffs, but a tariff is really a form of taxation in itself, only it shifts the tax burden onto foreign people. Yet the non-aggression principle must apply to all people. It has no "American only" caveat. It is not a nationalist principle. If it is wrong to tax people within the territory, it is also wrong to tax people outside of the territory. The initiation of force against people in general is the problem, not what specific group of people that are being aggressed against. Any attempt to forcibly externalise the costs of the state onto people outside of the territorial dominion still presents us with a problem.
Another argument that some minarchists may make is that the real problem is income taxation and that a sales tax is truly voluntary because you can always abstain from buying those products. But this is fallacious and is similar to the "love it or leave it" argument. For as soon as you do decide to buy the product, you are made to pay a surplus on top of the actual price that the product is being sold for. In short, a third party, the state, is claiming a chunk of transactions that one takes part in. One should be able to buy the product at the actual market price — which is the price without the tax. In either case, if one wants to survive at all in the world, one is going to have to buy some products at some point. Sales taxation presents a false choice between not buying things and paying a tax on top of the price that those things initially are being sold for. You are still ultimately bound by law under the threat of force to pay the sales tax, lest you be hauled off to jail. One most certainly cannot haggle with the store owner to deduct the tax from the price. The store owners in themselves are likewise coerced under the threat of force to add the tax on top of their initial price.
Objectivists advocate something a bit different from what most libertarian minarchists support. They oppose taxation and advocate what may be called "subscribed government" or voluntary donations to the government. But if this is the case it ceases to be a state can may as well be called a "private protection agency". For if it is truly patronised just like a business, then it has market prices, and instead of saying "donations" we may as well call it "investment". However, if this institution still maintains a coercive monopoly by initiating force or threatening to do so in order to stop people from forming or patronising any other protection agency within the territory, then it is not truly voluntary either and it still is a state. So even if taxation were abolished, states would still be involuntary if they still tried to maintain a coercive territorial monopoly. This is the underlying problem in the ideal of the Objectivist state (despite the fact that they eliminate taxation from the picture).
Another more pragmatic point is that in the absence of competition, there is no genuine market prices due to the calculation problem. There really would be no rational indicators as to wether the service is efficient or not. In short, the economic problems involved in a monopoly apply to states in general. A further point is that if they were logically consistent in their opposition to competition in these fields, Objectivists would have to advocate a one world government, for if their ideals apply to all human beings, then all human beings must be subjected to the same territorial dominion. The mere existence of multiple jurisdictions with laws that vary in their content, wether that be multiple county governments or multiple national governments, defies the Objectivist's desire for legal uniformity. Of course, no Objectivist to my knowledge has ever advocated a single unified global government. But this is indeed the logical implication of their own political doctrine.
In a sense, all Objectivists have to do is remove the territorial monopoly aspect of their ideal form of government and they would be free market anarchists. But they refuse to do this. Yet they are contradicting their own ethical principles in supporting a state in the first place. No Objectivist to my knowledge has ever been able to explain how their Objectivist government obtains its territorial monopoly in the first place without initiating force against competition within the given territory, and further continually initiating force in order to maintain that monopoly. Supposing that an Objectivist government already is in place, what if I wish to start up my own private protection agency or dispute resolution organisation within the territory? Or what if I wish to patronise such an agency instead of the Objectivist government? The Objectivist government has only two options: initiate force against me or cease to be a government in any rational sense of the word.
It would be wise for minarchists to take heed of the methods by which states have historically gained and maintained their territorial dominions. For the state ultimately hinges on its exercise of control over land, both directly and indirectly. In the most obvious and direct sense, the government buildings rely on control over the land that it resides on by the state. But the state inherently also claims and indirectly excercises control over the entire territory that makes up its so-called "borders". How do these dominions come about? The most obvious answer is plain old land theft, which has been watered down in legal terms to be known as "imminent domain". The most cursory glance at history shows land theft to be at the heart of the formation and expansion of states. But even in cases where the state "bought" land from willing sellers, the funds that they bought it with initially came from some form of taxation. Surely a robber is not justified in their theft because they went on to buy things from willing sellers with the stolen money. The state would still be peddling stolen funds in order to achieve land in this way. No good can follow from an initially evil act.
In summary, it should be quite obvious that advocating a minimal state of any kind while simultaneously claiming that the initiation of force and the threat thereof is wrong is self-contradictory. The minarchist's own logic works against them. If it is wrong for the government to steal people's money to provide for healthcare or retirement money or schools, then why would it be any better for these very same means to be used towards any other ends such as the provision of police, courts and a military? And even in the absence of mechanisms such as taxation, if it is wrong to initiate force, then how can the state legitimately stop people who have not initiated force themselves from forming and patronising alternative defensive and dispute resolving organisations? The minarchist, in order to remain consistent with their own stated ethical axioms, should become a market anarchist. Anarchy is the logical result of their own principles. They should not be scared to ditch their cognitive dissonance and embrace anarchy.