Yeah it can be quite confusing! Prohibition of anything rarely yields the results that policy makers hope to achieve. Their 'logic' is that the potential shame and legal consequences associated with being criminally charged will serve as a major con to buyers that outweigh any pros to purchasing sexual services. Granting legal immunity to the seller protects them from being punished for their "exploitation", something that the nordic model says is inherent to the work itself. (Which it is not.)
As for taxes, those are collected by the provider at the time of purchase. Much like any other service, you pay the applicable taxes and the government collects those from the business. It's a very common misconception that sex workers don't pay taxes; in fact we do have a tax code to file under, but many choose a vanilla cover business to show on paper for reasons related to stigma. If one is doing this as their sole form of employment, not filing income drastically limits what they can purchase and/or borrow. Of course there may be some who choose not to file a portion of their sex work income. The same can be said of some restaurant staff, taxi drivers, handymen, etc.
You're getting to the right track, but decriminalization is the type of legislation that we as sex workers hope for. For a lot of people, they may think this boils down to semantics, but there are key differences between that and a legalized framework. Legalization still allows for government involvement in a high capacity by creating expensive/inaccessible legal hoops for sex workers to jump through in order to be in accordance with the law. This in turn pushes marginalized workers further into those dark shadows you mentioned. This is a whole other discussion on its own, but if you want to learn more about it, I'd encourage a bit of rummaging around on google. The benefits to decriminalization of sex work are well documented through many human rights organizations. 🙂