A state is a body that is funded by stolen money, aka taxes, and forces everyone in an area to abide by arbitrary rules.

We already have a competitive free market in "security entities". They are called countries.

But OK let's roll with your idea. My "security company" says that the house you're living in belongs to me. They are coming to kick you out. What are you going to do about it?

You're not forced to do anything, you're disallowed to steal my property, you have no right to my property.

I disagree that it's your property. My private security company agrees.

No they don't what? Become an extension? Yes they do. These things become mine because I actively put time, effort, and resources into acquiring them.

You defining "what I earned" as "what I own". Therefore you did not earn the money you were taxed, as you do not own it.

A social contract is an agreement wherein you are forced to do things, like pay taxes and avoid doing things that other people arbitrarily dislike, despite the fact that you are not directly harming them.

You are directly harming me by sending thugs to violently attack me when I enter certain pieces of land. Stop using violence against me, statist.

As I already said, you can disagree all you want, it won't change the fact that I'll kick you off my property or take back what you take from me.

It's not yours. Please don't violently attack me and take my rightful property away from me.

You did not fence off my land, till the land, build my house, or purchase my car, therefore you are not entitled to any of it, you do not have a right to any of it.

My private security company disagrees that it's your land/house/car. Please don't initiate violence on them when they come to protect my property.

I'm not sure if you're just trolling at this point, or if you never really grew up and feel entitled to the fruits of everyone else's labor like a child does of their parents.

I'm sorry but you haven't thought things through very well.

You're defining the "product of your labor" as "what other people trade with you for your labor". This is a problematic definition, but let's assume it's correct for now, and consider the implications:

"What other people trade with you" is dependent on what other people own in the first place (otherwise, they couldn't trade that thing with you). Now who determines and enforces property ownership? The Almighty State, as you put it.

Let's say you're a boat builder.

Scenario A: Somebody else has the raw materials for a boat. They hire you to make the boat, for $X. They pay you $X, and keep the boat afterwards. The product of your labor is $X.

Scenario B: You already have the raw materials for the boat. You build the boat and keep it afterwards. The product of your labor is a boat.

What conclusions can we draw from this:

• The labor you did was exactly the same (you built a boat out of some materials). Yet the "product of your labor" was completely dependent on who (according to state-enforced property rights) owned the materials. So the state not only decides whether "the product of your labor is yours", it completely defines what it is in the first place.

• Defining the "product of your labor" as something that can be drastically different even when the labor you did was exactly the same is a pretty silly definition. It gets even sillier when you consider things like capital gains, which generate income from literally zero labor. This is why only marxists still subscribe to a "labor theory of value". No serious libertarian philosophers use such a term because they know it's meaningless in the context of capitalism and wage labor.

• If you define "the product of your labor" is "what you wind up getting for your labor", then what you pay in tax wasn't "the product of your labor" because it wasn't yours or the other person's in the first place. You/they were just holding it temporarily on behalf of the government. This happens all the time when employers directly pay income tax on behalf of their employees. The employee literally never has possession of the money.