Earlier quoted context omitted.
Extortion is perhaps not the most accurate word, going strictly by its definition. Anyway, the objection isn't to taxation of taxis, but rather to outright excluding new entrants to the taxi market. Which many cities do, via the medallion system.
I must admit, I don't see how it's extortion. It's capitalism at it's finest (by forcing the consideration of externalities as a free-market commodity). Since space in the streets is a fixed size-resource, supply and demand work to price medallions accordingly. If anything, the city sells medallions (referring to NYC) at a rate much lower than their actual value on the free market.
If you feel that use of the streets is not being rationed efficiently, or that heavy users of the streets are not paying enough relative to light users, then you can impose some kind of sliding scale or conditional tax on street use. This is not at all the same as an absolute cap on supply.