What you stated is the reasoning behind the Fed raising interest rates to combat inflation. It is effectively forcing involuntary unemployment on a sufficient number of Americans to weaken the economy. Something that only bankers could imagine as a good thing.

However, this presents a flip side as well which greatly benefits Treasury bond traders. The cost of deficit spending for the govt increases, amounting to backstopping losses to the investment class with higher bond yields. The govt provides money to the investment class for most of its spending "AND" guarantees a return on that money when it is invested. Nice work if you can get it.

This flip side of "fighting inflation" is pumping over $400 billion into the economy to the people who are leveraging it to buy residential properties, the source of the highest inflation item currently.

Taxation "DOES" destroy dollars. It does this by applying all revenue to the national debt, which is the money supply. Reducing the money supply is the definition of destroying money in the non-govt sectors which is the only place where "money" exists. The currency issuing govt never "has" money because it doesn't need it to spend in the non-govt sectors to deploy resources and labor to its benefit.