Well, the taxi driver is reducing his costs by not paying taxes. That doesn't benefit the rest of the taxpayers...

The taxi driver is also reducing his cost by not paying credit card companies.

Given credit card companies have legal means to pay less percentage tax on much more income than the cab driver and suck money out of taxpayers' pockets in many other ways, I'd offer that screwing over the credit card company might benefit the rest of taxpayers more than the cabbie paying tax does.

If they tell you after giving you a ride that you have to go to an ATM and pay the ATM fee, then they are just passing the cost on to you at a net loss - ATM fees are higher than CC fees on purchases the size of a typical cab fare. I'm not convinced that it's better to funnel money to banks rather than CC companies.

If you're paying ATM fees a) that's on the banks, not on the cab driver, and b) you need to switch banks--I have paid a handful of ATM fees in the last decade and I make in-person purchases almost exclusively in cash.

If there's no bank you have an account at within a reasonable distance, you might not have a choice. Obviously I use free ATMs when I can, but how much control do you have when a cabbie is demanding money?

I moved a year ago so there isn't a bank I have an account at in my current state. But my bank is part of a national network of ATMs. If I use an out-of-network ATM the fee is refunded up to once a month.

Banks get money either way. They get most of the money from a credit card transaction.

Even if the cabbie doesn't give a substantially lower rate if you choose not to pay with credit, there are indirect benefits to the consumer, like keeping more cabbies on the street because it makes the profession more lucrative (and presumably, patrons of cab services want a sufficient supply of cab drivers).