The pitfalls of freedom: the state

Anyone who advocates for any kind of freedom is asked at some point how would they run things if they were in power, an the shotr answer is almost always "Less/No taxes, prison is to rehabilitate citizens, legalise some/all drugs", but the long answer is more complicated than that.
The state should be reduced almost to the point of a collection of city states, and should ensure two things, no centralisation of power in the state and no monopolies in the market. This goal is made in a number of steps.

The first step, as in making any new state is to make a constitution that will ensure the rights of citizens, separates the government into three equal and seperate parts(legislative, judicial, executive) and the basis for all other laws that are needed.
The second step while writting a constitution is to entroduce term limits that would see no person trying to consolidate power in an office not be able to reap the fruit of their labour. An example of the term limits could read "No one person can hold public office in any capacity for more than X years. This is to ensure no gaming the system by changing chairs every two or so elections. Another thing to consider on the topic of the people who can hold office is who should be able to hold any type of public office. The ideal type of person to hold office should be at least fifty, made enough to sustain them and their family so they are not prone to taking bribes and they should have children.
The third step is one of the most important ones for rooting out corruption. the mint for currency should be heavily regulated to ensure there is no over printing of currency, and the central bank should not hold deposits of a private citizen.
The fourth step is taxes, and before any libertarian rolls their eyes, yes taxation should be on a minimum so the free market can breathe, but they also make almost all of the state's revenue, unless you want to extort your citizens by enforcing quotas for police fines for things like jaywalking or breaking the speed limit by 0,5 miles an hour. Taxes should not exede 15% of profits. You can run wild with implementing a flat tax on profit(sales, increase of worth) and income, or make some crazy progressive system with fifteen different brackets all rising by 1% for income and a flat profit tax of 15%. The reason why I chose 15% as an ideal part of income to be forfeit for tax is that it gives the opportunity to people to have enough disposable income to contribute more to the economy, and doesn't make small bussineses struggle that much, and the government still gets enough to pay the people running the system and maybe even give out some grants for parts of industry that is stagnating.

One part of running the state is missing from the steps of decentralisation and that part is the buirocracy. The buirocracy of a fully decentralised state should also be small and decentralised. This means that all one needs to have to get something done in the buirocratic system of the state is an ID and proof of ownership where it aplies. Permits should be aquired by filling out a form.

Prisons should be owned exclusively by the government, where citizens that broke the law are rehabilitated in different ways. 
People that commited murder should get counseling.
Gang members should be educated in using their capabilities in a constructive rather than destructive ways and how to earn a decent wage.
White collar criminals should be used as cheap labour for maintaining roads and parks. This does not aply to tax evasion, as it is easily remedied by a fine of double of the evaded taxes.
Sexual crimes are punished by psychiatric evaluation and making it known to the population of the prison what you did.
Any other unspecified crime is to be remedied by education and counseling as fit for the crime.

This is just the bare bones of a system that takes freedom of the individual as the most sacred part of a society. I will talk about other subjects at a later date.