The reasons fiat currency has value are far more complicated than just "taxes". If that were true, people would only convert their money to dollars as needed to pay tax, but obviously that's not the case.

There is an inherent value to a currency system, and that value amplified by network effects. The government definitely anchors that network (through many mechanisms, not just taxation), but there's still a lot of inertia there regardless.

> through many mechanisms, not just taxation

What other (governmental) mechanisms do you view as anchoring the currency?

"If you don't believe me, consider why the US dollar has value at your local store and the Monopoly dollar doesn't."

Well, the primary reason is that US dollars are declared by government fiat (hence the term) to be "legal tender for all debts public and private". You can't legally refuse to take US dollars (in the United States, obviously ... other countries give their own currencies a similar status). That seems only tangentially related to whether the dollars come from taxes or printing presses.

> "legal tender for all debts public and private"

Government accepting payment for public debts in legal tender... is taxes. They're the first market maker for a fiat currency. It's certainly possible to just run printing presses, but that typically leads to hyperinflation and the replacement of the currency.

Thats a terrible to reason to have or increase taxes. If you eliminated paper currency altogether in one fell swoop, the next day you would have another one replace it, be it bitcoin, gold or cigarettes.

Something underlies the value of bitcoin (proof of work), gold (rarity, utility, beauty, portability), cigarettes (addiction). Think through what underlies the value of fiat currencies like the US dollar. I'm with the chartalists [0]/Modern Monetary Theorists [1], believing that a government's ability to tax is the anchor for the currency's value.

[0] https://en.wikipedia.org/wiki/Chartalism [1] https://en.wikipedia.org/wiki/Modern_Monetary_Theory

Have barely scanned these articles, but even if I agreed that tax collection is what gives currency most of their circulatory value, thats no reason to have taxes, let alone making them higher.

Something's got to circulate. There's not enough bitcoin+gold+barter-able commodities to go around, so fiat currency is necessary to the economy as it stands. If you agree that taxes give currency most of its circulatory value, you have to figure out what else would give it value if taxes were taken away.

there is more than enough bitcoin/gold/barterable commodities to go around.. they are divisible objects like any other. And any bank could run its own bank notes, as it was in the past.

Having taxes to have circulatory value sounds pretty dumb to me.

If that's true, offshoring and tax havens would have no benefits.

I don't follow your logic. Offshoring has benefits independent of taxation. Tax havens have value in proportion to taxes, independent of the other effects of taxation. How does an effect of taxes on currency value diminish either?