They can't tax your bitcoin transactions and earnings unless they know about them and/or you or your counterparties willfully report them and pay up.

So yeah, non-compliance works, is effective, and they know it. But bitcoin privacy, is hard for people - it needs to be easier: make every spend a coin join

CBDC doesn't stop bitcoin, in fact it could force the use of bitcoin to survive when they've otherwise put you in a digital prison.