US are actually a good example of the limit of small government. Not having a mandatory government owned health insurance show low taxes on paper. But average people and companies still need to pay a lot for health insurance. Replacing a tax, by a de facto mandatory payement still means that people don’t have disposable income.
Even in European democracies with high taxes and strong government the control on your life isn’t that big. Yes you may need a municipal permit rather than a HOA permission or may have a government employed University Dean telling you that you fail the medical school admission test rather than a private bank telling you the same. But in both cases, the government looks like the best option