Well, first off, this should not be construed as advice to avoid taxes. You should pay your taxes and otherwise be a law abiding citizen.

That being said, you can't use bitcoin to avoid paying your income taxes.

When people talk about avoiding taxes with bitcoin they are usually talking about capital gains tax.

That is the tax you pay on investments, like stocks or bonds. In most countries this is 20% or above.

As bitcoin exchanges are not currently required to report the trading activities of their users the government cannot know what you may have earned or lost in trading bitcoin, though as a law abiding citizen, you are supposed to report it on your tax return. Thereby illustrating how the unscrupulous may avoid taxes, by simply forgetting to report earnings.

But you wouldn't do that right?