The issue is with the use of coercion and violence to accomplish ends. People would be more than happy to pay for their communities to be protected by trained and armed individuals. And members can donate to those that can’t afford the service. The idea that society would fall apart if we didn’t have a government that took people’s money by force is a psyop to get people conditioned to give more of their money to the state. Income and many other forms of taxes were not always a thing in the US.
Discussion
You just described a state with common protections and common welfare... it's almost as if humans through the entire agrarian age have invented the same thing over, and over, and over again because the citizens find value in it. But, as with all organizations, states become lazy and corrupt, and end up being the predator it's citizens feared all along.
The protection and welfare is provided voluntarily, which is a key distinction. I’m not suggesting an overnight abolishment of taxes. Doing so would be like quitting heroin cold turkey, which would likely be fatal. We can rationalize why we need to have a group in society that has a monopoly on violence and coercion which won’t let individuals opt out without risking loosing their freedom.
We can rationalize lots of things.