Ineffectiveness should be determined by a logical and technical argument over the method, proposed as a possible solution, itself. You should identify what has it go wrong in practice. And you have in part already done it: that taxes are not earmarked (on compensation) and that the discouragement factor is insufficient. That is not necessary, it is not intrinsic to the method.
Nearby I commented on the infernal noise from electric cars. That is not necessary, not intrinsic: it just happens that people think it acceptable that some drive around with loudspeakers transmitting the screams of torture chambers. A potential solution becomes a problem because of external (non intrinsic) factors. It would be much, much easier to fix the external factors of the taxation problem than those of the "broken cybernetics" problem.
The factor you are not considering is the omnipresence of corruption. Power Corrupts, and the more power you give government the more corrupt it becomes, this is born out time and time again, yet humanity refuses to learn this lesson.
The second you give government the powers you are advocating for, the people in government start thinking of all the different ways they can "help society", this amount of power is incredibly corrupting and can not be resisted, thus it always ends badly. ALWAYS
