Try this out for size, eliminate mandatory income taxes, open up the government to donations of all kinds (monetary and more real resources of matter and energy, too) and then restructure public programs to have the following three categories:
A. Free to All – Services and products that are universally needed. Specifically, the physical inputs and outputs: food, water, shelter, human waste collection, freedom of movement/expression (like legal use of roads, public/shared communication technology, public land use) etc.). The things are all provided absolutely free for the asking, with no strings attached, for all Earthlings, to the best of the government’s ability. This category is the primary goal of all government: to serve the public’s core needs for health.
B. Partially Subsidized, with sliding scale fees based on ability to pay – Services and products that are highly beneficial to both individuals and society as a whole, in the sense of increasing people’s health and ability to do good work for the world, but that are not physically needed for normal healthy growth. For example: individualized education, high-speed public transportation, moderate-sized private housing, and slightly fancier technology gizmos such as personal computers and cell phones and such.
C. Full Price including the cost to society (generally equal to the amount of “profit” a for-profit company would charge) – Services and products that are not really beneficial to people, or which only temporarily benefit a small number of individuals. These would include private yachts, mansions, one of a kind artwork, fancy technology gizmos, personal training, etc.
Earnings from category C and B would go to fund the free or subsidized category B and A programs. Government programs would compete with the private industry and non-profit to provide these things to the public. Category C being where for-profit companies could really be able to be successful, since the profits would be about the same as the government’s “social costs”, though they might be able to compete well in category B for the wealthier folks. NGO’s might be equally successful in the B and A categories, and maybe even in the C category.
Also, all government costs could be paid in real goods and energy (volunteer work, valuable materials, socially useful information, etc.). No money would ever be necessary, but would still be legal as tender, too.
This approach increases the diversity and wealth of the economy, while serving the public’s needs most efficiently, while simultaneously increasing healthy competition in the marketplace.