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 ‚Being taxed’ imo is the softest way a government can react. 

Suddenly you are in focus and your life is destroyed faster than you can say: ‚Please take my 10 cents‘. 
 How can you pay ANY merchant with that logic? How do I know my merchant isn't doing exactly that? How can anyone pay anyone P2P with that logic? I guess that's it for bitcoin. We all need to switch to monero. 
 E.g. with non-kyc bitcoin and joinmarket or 1-2 ecash-‚hops‘. 

They can do what they want. 
My name is not connected to them and not to find in their database or on their clientlist. 

Surely there are some more steps needed to be fully private in most cases but the most important thing imo is to buy kyc free and then coinjoin. 
 So assuming they follow everything they can trace, what remains can raise suspicion in just the same way. Also, the elephant in the room is that none of this scales if you want to benefit from large amount of coin.