But when he goes to buy doritos and a red bull at 7-11, some of that money is captured. I.e., Lot's of black market dollars wind up being used to make legal taxed sales purchases.
But the legal dollars do to, if you go buy a new garden hose from a local realtor, and the owner goes and buys doritos with his proceeds, you get the taxes off both.
In practice, you could tax one thing everyone elses (like food) and just wait it out, and all money will eventually route itself back through the taxed exchange. The point of such taxes is to take a fraction of all exchanges.
Though, I'd rather they solve the problem of why a black market needs to exist than try finagling a tax solution on it. You have to go back to the drawing board and ask "what is there a demand for we have artificially restricted such that it is forced onto a black market?" and see that tremendous potential tax revenue for what it is.
Well as long as you are trying to tax and monitor transactions, there is always a market for not paying the tax, even if everything is legal to buy or sell.
