user3945: Today, states can follow money trails and transaction histories, usually involving checking bank accounts. As as I understand, It's impossible for anyone else to read your Bitcoin transactions and current balance without your consent.
In a Bitcoin world, how can a state monitor bank account when it's impossible to check their transactions?

user1507: As is, the US has a voluntary income tax.  You fill out forms, determine how much you owe, and pay it.  If the government suspects that you're wrong, you get audited.  So with bitcoins, it would be the same.  You would determine your income and pay Uncle Sam his due.  But you have to pay in USD, not BTC.
Cash transactions and bartering income already have to deal with this, but with bitcoins the scale would grow.

user3946: 
What prevents Bitcoins for being used by criminals to avoid
  taxation?

nothing.  thats the price of anonymity:  it can be used for good and for bad.  

In a Bitcoin world, how can a state tax its citizens when it's
  impossible to check their transactions?

in a hypothetical purely bitcoin world, the state would have to find different ways of funding itself, if it existed at all. 

3945: <p>Today, states can follow money trails and transaction histories, usually involving checking bank accounts. As as I understand, It's impossible for anyone else to read your Bitcoin transactions and current balance without your consent.</p>

<p>In a Bitcoin world, how can a state monitor bank account when it's impossible to check their transactions?</p>
 1507: <p>As is, the US has a voluntary income tax.  You fill out forms, determine how much you owe, and pay it.  If the government suspects that you're wrong, you get audited.  So with bitcoins, it would be the same.  You would determine your income and pay Uncle Sam his due.  But you have to pay in USD, not BTC.</p>

<p>Cash transactions and bartering income already have to deal with this, but with bitcoins the scale would grow.</p>
 3946: <blockquote>
  <p>What prevents Bitcoins for being used by criminals to avoid
  taxation?</p>
</blockquote>

<p>nothing.  thats the price of anonymity:  it can be used for good and for bad.  </p>

<blockquote>
  <p>In a Bitcoin world, how can a state tax its citizens when it's
  impossible to check their transactions?</p>
</blockquote>

<p>in a hypothetical purely bitcoin world, the state would have to find different ways of funding itself, if it existed at all. </p>
