"If there was no taxation, there would be no "compelling" reason for anyone to keep using the currency ..."

This is correct.

Remember: no matter what you have and no matter how valuable it is - you cannot pay your taxes with anything but your local currency. This is not a coincidence.

You cannot pay your taxes with gold bricks or with diamonds or with the Mona Lisa. You cannot trade highly liquid stocks or valuable real estate. You must sell those things to buy dollars.

It will never be otherwise. The point of the dollars is to have something that you must buy in order to pay your tax dues.