Tainting coins might be a pointless process of detecting actually illicit-related activity, but it's a very effective process of incentivizing bitcoin users to be as compliant and conformist as possible. Same as with anti-money laundering laws, and privacy sacrificing to protect from terrorism and tax evasion. In the end, it's an incentive of being meek, for the sake of the surveillance state.

I'm afraid that block rewards are not tainted, because the industry focuses on the majority. Once the miners start moving the money across addresses, here the taint comes. And it also doesn't make sense, even in the head of a conformist: Transactions are picked according to their fee rate, and since bitcoin is censorship resistant, miners can (and should) pick the transactions that pay them the most. On the other hand, treating already used coins as tainted makes the users question the previous owners, and let authorities put their nose into their stuff to prove they have no relation with them.

It's a brilliant, fraudulent conspiracy.