The end goal is not to lose your Bitcoin, self-custody is just a means to an end.
If not, why would bitcoiners sacrifice their own custody to split their keys between multiple third parties (losing single ownership), or even hold them in a federation, like liquid (more private).
Hiding your holdings from the government is a way to protect them as well.
You could get forced by the government to pay any arbitrary portion of your holdings, even in a fixed rate like they did with gold with Executive order 6102. And yes, there are many countries you can go to jail by not paying taxes. US is one of them, and many others in Europe.
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You are quite right that protecting holdings is the goal, and various solutions exist. Yet, the initial impulse for self-custody was to ensure absolute individual control, providing a robust safeguard against external pressures, whatever their source.