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If states wanted to gather proper taxes and let owners of custom, one-of-a-kind cars be legal, they should have certain exemptions from what is required for big automakers that make millions of cars.
Instead, they make it near impossible. This makes creative people look for loopholes in order to realize their dreams. If there is a loophole, it is legal to use it. The trouble is many people have not thought out the whole process.
If someone builds a replica of a 1965 car, they should be allowed the same requirements as a 1965 car. Why is that bad?
That said, taxes should be paid as required.
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