Except in my experience cabbies are like "yeah we take credit" and then afterwards "oh my credit card machine is broken, are you sure you don't have cash? I'll drive you to the ATM..."
Cabbies want to dodge that income tax.
And then you tell them "well, thanks for the free ride" and you walk away. I've never had a cab driver balk when I use that and the machine immediately starts working again.
Got in a shouting match with a cabbie once in Chicago for this same thing and when I opened the door to get out after he insisted repeatedly his machine wasn't working, he threatened to kill me if I didn't pay. Then, when I threatened to call the cops, his machine immediately started working.
This probably varies by location, but in nyc cabs are required to have working credit card readers. Thus, insisting on credit card pretty much always works - the alternative is that they admit they illegally picked you up.
In over a decade of life in NYC, never had a problem with taxis incorrectly refusing cards. Happens 90%+ of the time in Philadelphia though, which is why I take Uber or similar whenever possible there.
All a matter of perspective, which is why we can't just arbitrarily declare our conduct beneficial and pretend like that's a license to break the relevant laws.
If one believes that a proposed-but-currently-illegal behavior is beneficial to society, the technically correct way to go about rectifying the situation is to discuss with your local democratic representatives, who can take the issue back to the legislative chamber and work to correct the law. Admittedly, that's pretty impractical at this point.
The taxi driver is also reducing his cost by not paying credit card companies.
Given credit card companies have legal means to pay less percentage tax on much more income than the cab driver and suck money out of taxpayers' pockets in many other ways, I'd offer that screwing over the credit card company might benefit the rest of taxpayers more than the cabbie paying tax does.
If they tell you after giving you a ride that you have to go to an ATM and pay the ATM fee, then they are just passing the cost on to you at a net loss - ATM fees are higher than CC fees on purchases the size of a typical cab fare. I'm not convinced that it's better to funnel money to banks rather than CC companies.
If you're paying ATM fees a) that's on the banks, not on the cab driver, and b) you need to switch banks--I have paid a handful of ATM fees in the last decade and I make in-person purchases almost exclusively in cash.
If there's no bank you have an account at within a reasonable distance, you might not have a choice. Obviously I use free ATMs when I can, but how much control do you have when a cabbie is demanding money?
I moved a year ago so there isn't a bank I have an account at in my current state. But my bank is part of a national network of ATMs. If I use an out-of-network ATM the fee is refunded up to once a month.
Even if the cabbie doesn't give a substantially lower rate if you choose not to pay with credit, there are indirect benefits to the consumer, like keeping more cabbies on the street because it makes the profession more lucrative (and presumably, patrons of cab services want a sufficient supply of cab drivers).
At which point, you get out of the car. They're required to have readers. Tough shit if they break the law in an attempt to dodge paying their share of taxes.
