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Technically they can't even get it from option 1 because the dollars need to exist to be taxed in the first place, every dollar taxed must first be spent, which means it must first be loaned into existence

Taxes are just how they control certain behavior and monetary velocity

On paper, the state could just own everything by ceasing to print money, the cascading bankruptcies -> legal system -> state asset

The alternative to this ponzi is hockeystick looking inflation charts as new spend finances old spend

Let's see how it ends...

Technically they can't even get it from option 1 because the dollars need to exist to be taxed in the first place

They could accept tax payments in a form other than dollars. They used to accept gold bullion and they could do so again

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Sure but that's a more overt confiscating of gold, in the context of their currency taxes are the demand driver of it

If they want to confiscate stuff slowly they need to do it with debt such as they do

This is a long known exploitation against sovereign states by the international bankers, classical state banks didn't allow for much interest because interest is how a countries wealth gets stolen from abroad

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