Is anyone else skeptical of the government's ability to effectively tax bitcoin? The scale of doing so both technologically and physically seems far too complicated for such a minute market.
If you make a lot of money buying and selling Bitcoin, you're probably going through exchanges that are licensed and can be subpoenaed for records if your own are in question. If you are accepting Bitcoin as payment on a website, you're probably using something like Coinbase to facilitate it, which means there are 3rd party records of your income.
If you're trading drugs on Silk Road #3, maybe that won't be taxed, but neither are most cash transactions on Craigslist; the government doesn't attempt to put an auditor in every home to catch every transaction that's supposed to be reported.
This could be strategic to prevent illegitimate companies from using BTC because if they are not paying taxes properly, the government has motivation to investigate the company. Honestly, I think this is probably a good thing because it will make it hard for companies dealing in illegal services to operate (although only slightly).
A concern I have is whether taxing transactions will make it more difficult to make quick and easy transactions on the internet (one of things that makes bitcoin so great).
And, I am also a little skeptical because it will be really hard to enforce even for legitimate companies. I think that if the government wants to support cryptocurrency, and tax it at the same time, then they're going to have create their own cryptocurreny protocol. I almost reckon that they'd need a system where the blockchain was hidden from outsiders (basically, transactions would not be anonymous to the government, and users wouldn't be able to publicly see transactions aside from confirmations from the government).
They don't tax Bitcoin, they tax you, and you can evade taxes in any currency or commodity if you're extremely careful and not very risk averse.
Barter is taxable, yard sales are taxable; people don't report them because it's too small to get noticed but if you're making a killing doing it, you're going to get caught.