I currently live in a country with no income tax right now (well, technically it is "low tax"). It is an island, so they have a duty charge on things coming into the island. Since there is hardly anything at all actually grown/produced here on the island, that means nearly everything has a duty.
There is no duty on books, but the retailers still mark them up (very likely because they can't get the same deals from the distributers the way US retail outfits can, so they either have to buy less or they have to buy from a retail outfit in the first place and then mark up to make a profit).
Most things have a duty of 22%, but electronics have a duty of 33%.
The wages are very high here, but the cost of living is high as well.
A waitress here can make a lot of money, and the teachers start at about $50K.
Many of the elderly here that didn't get a good education have the hardest time to keep up with the costs and they work multiple jobs. Usually as cleaning positions.
In addition to national defense (which is still here, even though we are technically currently under protection from Britain), there is also maintenance of roads, parks, and the adherence to the court structure (and then law enforcement that comes with that).
Essentially government is supposed to be filling gaps where it would be bad for the public were a for profit organization to do it - it could lead to corruption - which is very amusing to think that government is somehow immune to that (sure as hell isn't here).
If you want to read up on various countries that have low tax scenarios, then
http://www.lowtax.com is a good resource for that.
I know that in terms of size and population density, Bermuda is in the top 3 of wealth per capita in the world. I know it used to be the very top, but it is possible that some of the smaller Arab countries have passed it.