If you buy or earn BTC and sell it for fiat you are suppose to pay tax on the profit even though the majority of people do not. If you earn BTC and pay for stuff in BTC how can this ever be taxed when it is not converted to fiat? BTC is only taxable when turned back into fiat. On top of that if you use a privacy coin like xmr, dash, ect. like you mentioned these are completely invisible on both ends of the transaction and there is almost nothing that can be done. Even if people used a non privacy based coin and everyone did it there is really nothing anyone can do to stop it. The manpower simply does not exist to handle a situation like this. It is like trying to stop the internet itself. A police officer can not stand on every corner in the world.
From any country in the world you can open a bitcoin wallet located on a computer in any other country in the world using a tor browser and send that bitcoin to a wallet on a computer in any other country in the world. It can not be stopped or regulated. It is the people that have the power not the governments. This is also exactly why bitcoin was created in the first place, to be an alternative way of doing things and give the financial power back to the people not banks, big business and governments.
Actually, if someone earns BTC and are a US citizen, that person is supposed to pay income tax on it. Also, if someone purchases goods or services with a cryptocurrency, that person is responsible for any capital gains tax that may be due. Depending on what the BTC was worth when someone acquired it, that person could also claim a capital loss as well. Also, it is true that privacy coins are rather obfuscated when checking the blockchain. However, if someone is purchasing goods over the internet, the records on where they will be shipping the goods will not be anonymous.
The chances are pretty good that a person can get away without paying taxes. Also, the guidance is scant and the recording requirements are ridiculous. Chances are pretty good that if a person at least made the effort to pay their taxes on their cyrptocurrency transactions, the government will probably be forgiving if it wasn't perfect. However, if someone makes no effort at all to pay the taxes, they stand the risk of being one of the unlucky few that the government
will make an example out of. If someone wants to take the small chance of living in back taxes hell, that is up to them. The government could
literally take the shirt off someone's back if they wanted. Furthermore, they could take it a step further and take away that person's freedom after convicting them of tax evasion.