If you were paying taxes or employees like overstock does you'd have to convert to fiat, wouldnt you?

Sure, you'd either have to convert part of it to fiat for taxes, or carry a currency risk and pay the taxes separately (as I do.)

In the future, you'll probably be able to pay your expenses in bitcoin and then the issue becomes moot (you use your bitcoin earnings for expenses and your fiat earnings for taxes.)

OF COURSE you owe taxes every time you realize a gain. I pay taxes on every bitcoin I earn, including any I use to pay for expenses. Nothing I wrote implies that you don't have to pay taxes on all money earned with bitcoins.

However, just because you earn money with bitcoin doesn't mean you can't pay for the taxes on those bitcoins with money you earned in fiat.