In the other, being able to hide transactions from authorities will quickly erode the democracy you have.
Whether complete financial anonymity is a net positive or negative is likely context dependent.
I edited my comment above to suggest a configurable level of disclosure which the sender & recipient can enforce, so that way the same protocol can support both traceable and anonymous payments depending on the desired use-case and local laws.
The “taxable and disclosure” part is mostly ensuring that all the money earned by a merchant goes back to a real bank account. Where tax authorities should already have checks and balances in place for taxation purposes.
I wish I was making this up... https://www.haaretz.com/israel-news/inside-israel-s-decision...
To add to this, I think it might be better if the protocol was private by default but allow the sender to choose the level of disclosure and the recipient to publish (as part of the address?) what levels are required (so a sender can’t submit a payment whose disclosure level doesn’t match the policy set by the recipient - the transaction just wouldn’t happen as the miners would enforce this and reject the TX).
That would allow the protocol to be flexible to accommodate different use-cases depending on the jurisdiction the payment falls under and allow recipients to be compliant (as the protocol implicitly rejects transactions that don’t match the recipient’s chosen policy). The same protocol can thus be used across many different jurisdictions and anti-money-laundering regulations.