What exactly is it that limits this state to a market actor? They retain a monopoly on violence, indeed it's the source of their power.
Feudal society is believed to have formed on a similar, initially voluntary system. Vassals would pay fealty to the Lord who would offer his protection, but it quickly became non-voluntary as the Lord can enforce payment of fealty while the Vassal can only hope for protection.
I also don't see why we would be motivated to take care of our land when it becomes a financial burden to us and can be seized by the state upon non-payment of rent (or any other reason, as you said at the start the ability to seize/protect land by force is the source of their power).
I think the key to understanding this proposal is to realize that the state does not have to be a small subgroup of people (or in other words, elite) that it, in effect, is today. State's power is born from the people and as long as it's not centralized in the hands of a small elite who can use it to walk over most everyone else, most of your comments lose their significance.
As for the motivation to take care of the land, why on earth would you be voluntarily paying for it if all it was for you was financial burden?
The value of land to an individual can change due to unforeseen events. When land is property, it is more usually a cushion against changing circumstances. When there is a large tax on your land, changing financial circumstances may force you to have to abandon the land when you otherwise wouldn't, as it has become a liability in this system.