Of course there are tainted coins. Try spending known Silk Road coins for instance.
There are a lot of paper money seized by the government. Aren't they in circulation? Or would you deny accepting paper money just because once they have been used by a terrorist or drug dealer? That's the same with Bitcoin. If you and everyone would deny accepting paper money just because the money have been used in drug dealing, paper money wouldn't exist. The same theory is getting a position in case of BTC, they are calling tainted BTC so at some point, people stop using BTC lol.
I found a reply from LoyceV which I really liked pretty much, I used to think same as you about BTC but it's not really the case.
There are no "bad" Bitcoins. Saying certain Bitcoins are "tainted" is an attack on Bitcoin, and it only exists if people believe it. Stop saying it, stop believing it.