Nice idea overall but we are still a long way from realizing this dream. The first priority should be to increase adoption.
Yes, very long way to go for the gov to accept bitcoin.
When I look at the acceptance rate of bitcoin I realize that it is not longer away that governments will also accept it sooner. But still it will not kill the income tax as the government will create a way for themselves to collect the tax from their devised rules. It is also expected that the income tax will not be that much higher than what we earn with bitcoin.