Megan McArdle notices a story that Virginia has a voluntary taxation program with little uptake. She writes,
This is what economists call "revealed preference". What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we'd give the money to charity.
Imagine if the government were limited to collecting no more than 10 percent of GDP in taxes, with 5 percent at the Federal level, 4 percent at the state level, and 1 percent at the local level. But governments at all levels could hold bake sales at any time. That is, any government could compete with nonprofits for voluntary contributions.
By the way, I am guessing that local governments would have an easier time raising funds, because people can relate more to local government services.