Separation of money and state is not going to help because the current monetary system is centralized which means they can automatically take money from. your paychecks. The central banks is also not a state institution.

The solution is the is more along the lines of adding a law that says government shall never be allowed to steal(tax) a citizen or their money or paycheck.

Even on a Bitcoin standard the government could force business to keep track of their sales or add a tax on the payment screen.

theft(taxation) is the problem.