Consider an economy where both wages and personal purchases are mostly conducted in bitcoin or other cryptocurrency. How could a government do taxation?
Publicly visible objects, e.g., real estate, can be subject to property tax. Similarly, you can't get a license plate for your car unless you provide proof of paying required taxes (sales, excise) on your car. Sales tax, corporate income tax, and payroll tax can be collected from publicly visible businesses, such as those with brick and mortar storefronts. Such business could keep two sets of books, one to show to auditors, but we assume that is as difficult as it is to do currently with regular currency. Rewards for whistleblowers and high fines for businesses caught trying to evade taxes can keep them in line. It is curious that the businesses that are legitimate enough to keep good records are the ones targeted for taxation. Practically, those will be big businesses.
It is probably possible to require a paper trail for trading stocks and other securities enough to collect capital gains tax on them.
Import tariffs at the port of entry.
Government purchasing, including payroll of government employees, can still be done in the fiat currency, providing the government with some power to levy an inflation tax. Similarly, fines. (Previously, government money in the context of inflation.)
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