If the government doesn't have a backdoor in allowing them to track and/or tax every transaction, you bet your ass it's incompatible with the goals of government!
With bitcoin, they do. No backdoor, but the entire transaction log is public. It's even easier for the tax man because they don't have to query data from banks. Bitcoin is not a tax avoidance scheme and never meant to be.
The sooner they come up with a legal way to tax bitcoins, the better it is for business adoption, I guess...
