"Will providers be taxed more heavily? Will tax evasion be more of a thing?"

More heavily as opposed to zero right now? Yes.  

More of a thing than now where 100% of the sws evade taxes ?  
No, it would only require one sw to pay taxes to be less of a thing.

Both Uncle Sam and the state will want their cut. Independents and agencies alike would have to fork over a percentage.  

The bigger problem is human nature and societal conditioning. We've been told so long that P4P is suborning evil that it likely would take generations to overcome the contempt in which our activity is held. All the bible-thumpers (many of whom are fucking someone not their spouse and sometimes underage) will continue to characterize providers as succubi and the men who frequent them as godless villains. Unlike the much less demonized weed smoking (which itself took decades to "undemonize"), I don't see brothels opening (even discreetly) on every block once decriminalization or legalization occurs.

This is one of the more interesting policy questions.

 
But first allow me to touch on the assumption that 100% of providers evade taxes. That is both incorrect and honestly a little condescending. The vast majority pay taxes. We have to. For example, when I purchased my home, when I needed financing, when I needed to demonstrate legitimate income for any number of adult reasons that require proof of earnings, that requires filing. Self-employed individuals in this industry file under consulting, personal services, or similar categories more often than people assume. Now, are all providers reporting 100% of their income? Probably not. But show me a small business or a restaurant that still accepts cash and reports every dollar that hits the books and I'll show you a unicorn. That's not unique to us.  

 
On the actual policy question, the conversation needs to separate two things that get conflated constantly: decriminalization and legalization. They are not the same thing and they produce very different outcomes in practice and most providers would push for decriminalization.  

 
The Nordic model criminalizes the buyer rather than the seller and sounds provider friendly on paper. In practice it makes our lives harder in ways that don't get talked about enough. When clients are operating under legal threat they become harder to screen, more paranoid, less willing to hand over the kind of verifiable information that actually keeps us safe. The safety argument for providers genuinely weakens under the Nordic model even though the whole thing was designed with us in mind. Well intentioned framework, doesn't survive contact with how this actually works on the ground. And I say this as someone who has worked under the Nordic model outside of the United States.  

 
Full legalization has a different and frankly worst con and that centers around the cost of compliance. In regulated markets like parts of Nevada, Germany, Australia, and the Netherlands, operating legally means licensing fees, mandatory health checks, facility requirements, record keeping, inspections. Those costs are manageable if you're a large agency with infrastructure. They are most likely not manageable if you're an independent who has to compete with those agencies. What tends to happen is the market consolidates toward agencies and larger operations because they can absorb the overhead and independents can't. So legalization can paradoxically push out the very women it's supposed to protect by making independent operation economically unviable. And the independent model, for what it's worth, is generally the one that produces the best client experience anyway. So that's a loss for everyone.

 
The model that actually produces the best outcomes and largely preserves the current structure is full decriminalization: no licensing, zero compliance costs, just removal of criminal penalties on all sides. New Zealand, if I recall correctly, is the clearest real world example of this working. But it makes people uncomfortable because it doesn't come with the tidy regulatory apparatus that makes legalization feel orderly and controlled. Turns out "orderly and controlled" has a price and independents are usually the ones paying it.

 
The discretion question is real but honestly secondary to the structural one. If compliance costs push independents out and agencies in, discretion stops being a personal decision and becomes a facility design issue which is so much harder to control.

1) Licensing
2) Health related regulations
3) Location related regulations -- both public and private
4) Less privacy for all involved potentially -- all those BB service guys (which might all include BJ and DATY/DATO), perhaps stemming from 2 as well as some other reporting or business location related (do you need to have a sign up?).
5) Regulation on what can be offered, and how

 
All seem to point towards higher costs and possibly reduced services and satisfaction. Someone mentioned decriminalization which might be the best in terms of not impacting how things are getting do while allowing some improvements via ability to leverage courts or whatnot.

 
So depending on just how the legalization worked out and how people react to it, I can also image cases where it's legal but many still need to head to an illegal underground source which may we result in even greater legal risks.

The answer is......

if our hobby were legalized?

Rates would undoubtedly go UP.......a LOT higher.
Legalization means a new source of revenue....."taxes", whether as a business or independent contractor.

Taxes require filing.....  how many indys are prepared to do so?  
We would see the proliferation of new agencies left and right.  They would run the show as they would have the bandwidth as any small/large business.  

Agency gals could potentially become W2 employees, in order to get all the benefits, such as a 401k/SEP IRA and health insurance?  1099 indy contractors would of course exist, but seeing how many gals come from overseas and pocket currently pocket cash minus the expenses (condo/apartment/scheduler).  They barely are able to manage that, now add in filing taxes?

There is a reason why we don't have a "flat tax".  Every accountant/tax atty would be out of business.....

Best thing would be how we are currently, but police departments choosing to allocate their resources elsewhere.  Over the years, I've known many...and they HATE having to do "extra work" for little reward.....  Ever see a cop enforce a HOV violation....when it's cold, dark, and raining?  With the current political environment in many states, many of them are just counting the days until they retire and have that pension.

Except for the Christian right protests

I really did not see any cons.  That being said it was put forth where I live and they could not even get it on the ballot for the fall as there was not enough support so I dont think it will be happening anytime soon.

All good responses with a broad outlook. One thing is indisputable. Whenever the government gets involved in any business, efficiencies go down and costs go up. Remember,   President Ronald Reagan famously declared, "The nine most terrifying words in the English language are: I'm from the Government, and I'm here to help"