Trouble is, we are entirely free to exchange labour for goods, or indeed to print and use our own quasi-currencies. Furthermore, we are only taxed if and when we transact with the state's money (unless your state happens to have a poll tax). Legal tender laws stipulate only that the national currency must be accepted if offered, not that no other form of payment may be accepted. And I could be wrong, but as far as I know, there's no law (in liberal capitalist jurisdictions, at least) against "avoiding" tax simply by forbearing to transact in the national currency, only against undeclared (thus untaxed) transactions in that currency. Not that this leeches money of all coerciveness; but the argument for coerciveness presented here seems unsound.

Actually the government does level taxes on even pure barter (and certainly when using some non-standard currency in a monetary exchange). You just half to declare it yourself at some equivalent / 'fair market value'. No one may do that, but if audited, you'll have to pay: https://www.irs.gov/taxtopics/tc420.html

What a great conversation to sprinkle some significance into my great American commute! Lots of fruit to pick at the intersection of newer PK monetary thought and traditional Marxism. One thing I really struggled with however was the taxes cause unemployment logic. Many implicit links in this causal chain. If the premise though is that it is the scarcity of circulating media that results in people subsisting without steady paying jobs then I think this misses the mark. i tend to think chronic unemployment has more to do with how the credit originated by private issuers gets distributed between capital income versus labor income, which all happens further outside the influence of federal fiscal stance than your conversation suggested (though industrial policy may be a different matter). It is not because firms face a tax liability that they don't pay their workers enough to purchase their output. Federal deficits may fill the purchasing power gap enough to drive new investment and hiring of the unemployed. But fundamentally it is the profit sharing arrangement between the deputies and their client investments that creates the conditions for chronic unemployment. Which, to reach way out, is not necessarily to say that a worker-owned business universe would be without unemployment. But maybe without chronic unemployment? It's at least imaginable.