I may be missing your point though.
Maybe they're kicking the can down the road, but that's their choice.
The real issue here is that super rich are, at the end of that road, donating shares to their non-profits, tax free. ...and that their children then have access to that non-profit and all of its assets, again without income or estate tax.
The big hole here isn't the unrealized gains - it's the "charitable Foundations" that are a complete scam.
Unless they pay back said loan with another loan. Given the massive amount of wealth accumulated, you can rinse and repeat indefinitely. Basically you have a free cash flow machine, without ever having to convert that income as proceeds (unless you want to convert between asset types).
Having said I agree with your main point: we need to close the loopholes, and the charitable foundations is the biggest of all, and sadly the article missed the point entirely.
That shouldn't matter as long as they don't start to enjoy the benefit of those assets.
This means tax rules should separate the estate as a business/investment from the personal use of the funds/wealth.
Sure, at some point it becomes neigh impossible, like let's say Bill and Melinda went to Africa on their marriage anniversary, was that business or personal? (And yes, at that level of wealth, influence, income it's always both.)
When an owner (or close relative or friend of an owner) of a family trusts/foundations/estates/NGOs/church/non-profit conducts business through said entity, that entity should pay some tax corresponding to said expense as if some part of that expense were income to the owner/relative/friend.
I can't just say "Oh, I'm investing 30% of my income, tax that part when I sell later", I don't have that choice of kicking the can down the road.
The problem is you're not kicking the can down the road, you are delaying it forever. Your entire 'Lifestyle' can be funded tax free. Instead of things being your assets, that you spent money on you could have a company plane, car, boat, house. Lavish dinners can be put on the company card as 'business meetings' and travel as 'Business Travel'. This is all taken out of your business profits and the best tax structure for a business is at a loss or barly profitable. Add that to the point OP made about taxing collateral loans is it would semi-eliminate the 'loophole' of never having to pay taxs.
Edit: One more point. Should a $1m donation to scientology be considered a tax writeoff?
We can argue about whether or not it's good, but its not unthinkable. Property taxes in most places (in the USA, the subject of the article) are linked to the current market value of real estate. Sometimes property values rise, taxes follow, and people have to move.
That would only affect home refinancing, which will still be a considerable number of people.
For all intents and purposes, it is income and should be taxed as such.
This isn't a new thing. Property taxes are the wealth tax that already exists, at large.
That is... You're point on a tax reassessment is exactly what is being discussed. And if the tax on your wealth is increased as a form of capital wealth, expect the rates to be higher that most property taxes.
Edit: I see I missed that this was a hypothetical on touching collateral. Not sure how I feel on that one. In large because I know so many folks are essentially tricked by marketing to refinance all the time.
Taxing non-income wealth increases by any means incentivizes the government to manipulate the prices of those assets -- and more than any other entity, the government possesses the power to do so through regulation and legislation.
It also makes the government the eventual largest capital owner, which could create all sorts of unintended consequences. It could sit on those assets indefinitely (like it does its liabilities) instead of selling and using the money to fund itself. There's a special kind of poverty that exists when the government owns almost everything.
Also, there's a big difference between legal worth at a given time and fungible value at that time. The difference (or lack thereof) between the two could itself create all sorts of opportunities for gaming the system when fungible value becomes a basis for being taxed.
Unless you mean a series of leins incurred once a year based on price increases. But then an asset with high YoY volatility but no long-term gain would cause the lein sum to approach the value of the asset over many years, despite no material increase in price at exit. That makes no sense - the government profiting off of volatility alone.
If that's not what you mean, how is what you mean different from standard capital gains tax?
So: Exemptions specifically covering residency already exist in finance law. If you go bankrupt, you can still live in your house (only if you owned it, mind).
The government, as soon as practical, can auction the stock it receives. Thus identifying its value and releasing the funds.
I'm not advocating anything in particular. I'm only pointing out some potentially serious issues with the proposed system.
Sure, primary residence could be excluded. But that doesn't change anything about what I said, except perhaps blunt the initial impact on the middle class.
> The government, as soon as practical, can auction the stock it receives. Thus identifying its value and releasing the funds.
Perhaps that could be part of the tax law. I doubt it would stay that way... once the government can own stocks and portions of real estate, I'm sure it will seek to incrementally increase its benefit from doing so. I shudder to imagine politician-beaurocrats as the most powerful hedge fund managers of tomorrow.
There's nothing stopping the government from owning these things already (governments own plenty of real estate, in particular), so this seems like undue cynicism.
In fact there's almost no comparison to be made between the two.
https://www.forbes.com/sites/bisnow/2017/04/11/solving-the-m...
This is now really a bad faith argument.
You've moved the goalposts (again), and declared that your new goal wasn't met (when, in fact, you just ignored that part).
It's OK to admit you were wrong <3
If the government purchases real estate with its own money and later sells it--fine by me. They have business to take care of and need places to do it.
What bothers me specifically would be a growing federal or state government stake in assets owned by others by virtue of a tax law that grants them such ownership.
I imagine whole swaths of businesses, apartments, and other buildings in cities across the US that are >50% owned by the government 40 years from now.
It would push us a lot closer to a world where people don't own anything anymore besides their own houses (maybe not even that) and the government owns everything.
I'm really struggling to understand this point of view, given the article that you couldn't be bothered to read says the US government owns 15% of all real estate already.
In my country, the reason that a lot of people own their houses is because the government sold its housing stock to residents in the 1980s and 1990s. That created a majority of homeowners, for the first time.
The fact that the government didn't replace this housing stock has been the cause of a massive generational rift, with a reduction in owner-occupancy from that peak, down to the point that a plurality of people (the vast majority of people under 45 - almost all young families) are now private renters in insecure housing situations.
While that same housing stock - originally built by the people, for the people - is increasingly dominated by exploitative for-profit landlords.
Either pay %x in cash value or give %x percent of the item to the government.
Of course likely the government would just want to liquidate immediately but you could perhaps set it up as a "lien" on the stock/bond/property that gets satisfied at final sale.
It’s supposed to work out in the end as you have a higher basis at that point but you still have a liquidity issue.
Do they also get to leverage these shares to have a vote as to the business decisions, like any other share holder does? (assuming they have enough shares in this hypothetical share tax)
For simple income tax, where you're paid in dollars and hand the government a percentage, that's fine.
But what if you're paying a tax on, say, some equity you were given in a startup?
This can cause huge trouble for people who have illiquid assets, like equity in a private company. You have to pay tax in dollars based on a guess of the value of that equity, even though you can't trade the equity for dollars (it's not liquid). When you eventually can sell the asset, like at an IPO, its assessed value could have decreased and it might be worth even less than the taxes you already had to pay on it.
That's the kind of gift you don't want to receive.
I'm suggesting that, for those who are worried about that risk, the government allow you the option of handing over a percentage of the asset instead. If it ends up being worthless paper, then the government gets nothing, but on the other hand that's also the correct amount for them to get because the tax on $0 should also be $0.
Most likely, the government would choose to (or perhaps by legislation could be compelled to) sell the asset at an IPO, but that's a detail. Perhaps they could also have an agency for managing and directing such assets in the public interest.
No doubt they would be loads of ways to scam this though, setting up supposedly valuable companies to 'pay' a big tax bill, then rinse the company or allow it to fail while diverting profit elsewhere.
It would be an interesting idea to explore and could potentially be a massive boon to risky startups by allowing them to hand out equity more freely as incentives without worrying about the accompanying tax burden.
I cannot think of a more complicated mess as the government being part-owner of half the small businesses in America.
In this case, the value is not well defined. If you don't have a market, you cannot determine the value. You may think it's extremely valuable, but if you have no one else willing to recognize that value, then it doesn't really exist.
You can handle your hypo the same way the tax system handles mine. You can deduct the capital loss from future gains.
It could work in some cases but I don't see how it's the same as selling stock A and buying stock B.
Why would we want a system that taxes people on an unrealized gain and then (maybe) gives it back to them over coming years?
C'est la vie. That's how Capital Loss deductions, Electric Vehicle credits and other non-refundable tax credits currently work: individuals may not have enough upside to maximize their benefits, That's just how the system works as it is impossible to balance everyone's competing scenarios. If you are eligible for a $7500 EV credit but only paid $3000 in taxes, you'll only get that $3000 back, and not the full $7500.
1. When they do realize gains, the tax brackets are severely broken such that someone realizing $2Billion in capital gains pays a lower effective rate than someone with 1/10000th that number in income.
2. We live in a financial environment in which the Fed will rescue the stock market no matter what, creating asset inflation and making this a relatively reliable strategy, whereas there should be more theoretical risk in doing this. Bear markets, albeit painful, are the only times in recent history where wealth inequality decreases as the economy corrects and reallocates capital [0]. Staving them off at all costs for the last few decades via easy monetary policy is arguably one of the greatest contributors to the rise in wealth inequality, alongside poorly graduated income tax brackets and (to a lesser degree) automation.
I do completely agree that treating capital gains more favorably than earned income is just crazy (even though I personally benefit from it).
There would be some risk that you couldn't get another loan, but if you're only borrowing 10% of your net worth, it's probably an extremely small risk.
No they don't. The article even describes how they use income to pay for that, and then use the interest paid to avoid write off paying any income tax:
>Borrowing offers multiple benefits to Icahn: He gets huge tranches of cash to turbocharge his investment returns. Then he gets to deduct the interest from his taxes. In an interview, Icahn explained that he reports the profits and losses of his business empire on his personal taxes.
The whole article is full of logical fallacies and focusing on the wrong thing to drum up outrage. E.g. I do not care that Bezos didn't pay any taxes in some year where he sold no assets and received no income. What matters is what the tax brackets levy on wealthy people when they do liquidate, which are currently a complete joke and cap out at a number thousands of times lower than the highest earners.
The exact rules could be tweaked to keep it from being a burden on families taking a second mortgage, e.g. if you borrow less than a certain amount in the tax year perhaps the rule doesn't apply. Use your imagination.
This is pretty much the situation that the tax is designed to combat - people using their assets to increase their wealth without paying taxes. So yes, if you did that, you would need to pay taxes on the new money in the refinance. I don't see an issue if that makes this business model unprofitable or untenable.
> If we do this to homes, and the wealthy move their money to a new place, such as venture capital, do we try and re-price those illiquid assets each year?
There's no need to price anything. You value the assets put up as collateral as the amount of the loan they are securing.
> If one IPO’s and they take a loan against the stock to buy a home, do you give them their previous year’s mark-to-market payment back to them if the stock goes down the following year and they get a margin call?
Nope. It's just like selling and immediately re-purchasing.
> Imagine trying to grow a startup and being worth X on paper with no actual gains or money in the bank.
Ok, but nothing happens unless you borrow against it. I'm not sure what scenario you are imagining here.
People take out loans for much more or less than the value of the collateral. Do we ban that, or do we open up another tax/laundering loophole by letting the official value of a property diverge arbitrarily from a hypothetical sale value?
Which they have to pay back with post tax money. I don't see a problem here. At best this is tax deferral until capital gains are realized, something we allow for good reason - paying real money to cover tax on paper gains (which could vanish) is a problem, and could even force you into giving away an illiquid asset because you can't afford the tax on it.
They're gambling their stock will perform better than the interest rate on the loan. That's a reasonable gamble.
Taxing a loan seems silly.
Unless they die first. If heirs hold on to inherited property for a while (2 years?) they can sell it at the cost basis reset to the value at the time they inherited. They pay back the loan with the before-death gains untaxed. The original buyer got to effectively realize their gains via loans, untaxed.
https://smartasset.com/taxes/how-to-avoid-paying-capital-gai...
We bought a house last year and I was forced by QuickenLoans to liquidate my Tesla positions, that appreciated 5x and incurred short term capital gains. Were I richer, I could have avoided liquidating my long positions and pay proportionally less in taxes.
The most annoying part is that in the end they didn't even need all of my stock portfolio liquidated, only about 30% to cover closing costs. Yet I got hit by a 5 figure tax bill because of it.
In short - the system literally setup to extract as much as possible out of everyone, other than the wealthiest/most powerful. And that includes banks, government and lenders.
Eventually they have to sell stock to pay back the loan?
Aren't they just delaying the taxation?
https://www.thebalance.com/how-the-stepped-up-basis-loophole...
It's even worse than that. The interest on those loans is tax deductible, according to the New York Times: https://www.nytimes.com/2021/06/08/us/politics/income-taxes-...
If people really understood how this all essentially boils down to the rich not having to pay taxes, purely by being wealthy and being given loans on it, they'd riot tomorrow.
It would be interesting to see what happened if a sufficient amount of that debt was bought up and forced to be repaid.
Why not? A tax on wealth, even a small one, is the only mechanism to avoid a long-term drift towards a feudal-like state of society.
We also don’t need to make perfect the enemy of the good. We don’t need to account for absolutely every piece of wealth if we cover the big ones. We can also continue to revise these tax policies as new loopholes are discovered and exploited.
Major components of the economy are not valued regularly, e.g. private businesses. Sure, if a buyer paid $10MM last week for a private business, we might say it's worth $10MM today. But what about a business that was started from scratch by the founder? Or one that was last sold 30 years ago? Or one in a very niche industry?
Put simply, valuation is not only a science, but an art... and it's an expensive art. The cost and difficulty of administration alone would be reason enough to steer clear of a wealth tax.
Lastly, although I'm not a fan of higher taxes on anyone, even simply a more progressive income tax would make more sense than a wealth tax.
I'm not a fan of taxes on most stocks (eg wealth) rather than flows (eg income). But if you held a gun to my head and said "design a wealth tax!", I'd set the minimum wealth far above the $32MM proposed by Bernie Sanders or $50MM proposed by Elizabeth Warren.
And keep in mind, even if there are actually only 1,200 billionaires in the US, a number of people slightly below the threshold will still have to be analyzed; I might not know if I'm worth $800MM and owe no wealth tax or $1.2B and owe tax on $200B of wealth.
Oh bless your heart.
If there is no form of weath + inheritance tax, a feudal society is unavoidable.
Even if difficult, we'd better try.
What exactly do you mean by this? Holding wealth in bars of gold doesnt need to employee anyone (if you have enough of them, you might want security personnel, but you could also just own a Gold ETF or something).
Seems roughly fair
One might suspect the wealthy are just dropping turds in the punchbowl.
One thing I want to point out, the reason why 'wealth taxes have always failed' is because it's against the interests of the wealthy, and the wealthy are powerful. Look how scared republicans are of grover norquist and the billionaires that back him. It's hard not to argue the same thing is happening in the EU as well.
I especially love how the Koch brothers effectively funded an astroturf campaign that hijacked the republican party, to get blue collar folks to argue against taxes on the 1%. That is some rich irony.
Make the owner declare its value, tax it at the value. But anyone can buy it at that price. If they want to keep it, they'll need to value it correctly, and thus it will get taxed correctly.
I have to choose a price for all of my assets and then anyone could just be like 'yeah, I'll buy at that price' and take it from me? What if I bought the assets for the hope of it maybe being worth something in 5-10 years? Do I prematurely announce 'yeah, it's worth the price in 5-10 years that I hope it will be', and pay an enormous tax on something that's not a guarantee it will ever go to that price, just to keep other people from buying it from me if I announced what the market value is now? (And also I'm not allowed to keep any assets at market value unless I announce it's worth more to me?)
Ugh. Never get in a position where you could feasibly propose this in government, please.
I wasn't proposing that this become policy for all assets. Would it allow you to accurately assess the price of rare high valued art for the purposes of a wealth tax -- yes. It would also allow you to value other assets as well, but there are drawbacks.
I don't think your example of speculation is particularly good example of a drawback though. If you need to set the price at X so that someone doesn't buy it from you now, then that means its value is indeed just below X (assuming you've set X correctly).
If you're the only person in the world you thinks that the value of your asset will be 10X in 10 years, then you can safely set the value at X now and nobody will buy it from you. If you aren't the only person in the world who thinks this and someone is willing to buy it from you now for 2X, then I guess the value of the asset right now is 2X.
But I'm willing to read more about the idea, if you have an article or two that makes a good case for your proposal, please post and I'll give it a look.
I saw in another comment someone called it the Harberger tax, and linked to a 66 page paper that I'm just not going to read for the sake of an internet post.
I could have been less antagonistic in my reply, I apologize for that.
I do think you're overestimating how well people can judge, individually, what something is worth accurately on declaration, both now and in the future, especially if it's an asset they don't ever want to part with.
But again, I'd be happy to read articles from experts that make a case for this.
Also a video here: https://www.youtube.com/watch?v=uj186urDU8c
Neither of these is particularly short and still don't address all (or even many) of the practical issues. As with most real policy and law, I don't think something can be both short and cover all the real world cases. There's unfortunately a reason most laws are really long.
I believe the chapter of the book addresses the issue of how will people know what values to set. In addition to the solution proposed in the book, another alternative (of mine), is to allow people to pay some amount of retroactive tax. Let's say someone tries to buy the asset from you for your set price, but you don't want to sell. You can raise the price to some amount the buyer no longer wants to pay, but since you were underpaying taxes on the asset, you need to make them up.
Would such a proposal probably mean people set lower prices than are correct -- yes; would it still make sense for things like homes -- yes.
Also specifically for houses, at what point are you expected to make such a declaration? You don't really own the house until you've completely paid off the mortgage on it. Until then it really belongs to the bank or mortgage lender. So does that mean you're free to not make such a declaration until your 30 year mortgage is up? And what if you take out a second mortgage on the property during that time?
In a case where you have a collateralized loan to purchase the asset, I imagine the lender could require the value you set to be at least the value left on the loan. (But the lender probably shouldn't be allowed to set the value beyond that stipulation.)
I also want to say that I definitely do not have all the answers for all the possible policy issues that might or will come up. I enjoy trying to think them through, so the first attempt might have problems and the cycle of finding those problems and fixing them will eventually lead to something that hopefully works well.
My fridge? My dog? My shoes? My car? My bike? My boat? My model railroad set? My grandmothers ashes? My underwear? Oops I accidentally undervalued my gaming computer on my taxes and now people are knocking on my door.
You'd end up with a document 3 million pages long and vengeful neighbors and exes buying each others items to fuck with each other. You're calling it a strawman argument, but these are actual things that would have to be addressed.
No amount of "delving into 150 years of research" gets around all the massive, massive holes in your ridiculous idea.
For example, you could easily say that only assets that would be declared as having a value over X amount need to be declared in this way. Choose X to be somewhere in the neighborhood of a house, and you would get almost all the value of such a policy without any of the drawbacks you just listed.
Does my collection of rare coins count as one asset as a whole, or individual assets that are each under X amount? Who decides what my random painting is worth so I know if I have to declare it? What happens when my asset depreciates?
Also, once you go to X being "somewhere in the neighborhood of a house" you lose a TON of taxable income with this policy to the point where it's probably not worth it. You're not going to gain much money taxing a few mega-yachts and rare paintings, especially when you have to include the money spent dealing with more complicated taxes and audits.
We can just raise income and capital gains taxes instead and it's a whole lot easier. Wealth taxes that include assets are so fragile and complicated.
I also think you're making a poor estimate of what the distribution of wealth looks like. Yes, there are lots of small items, but the vast majority of wealth is stored in items/things/land/etc. of significant value. Perhaps more than anything it is stored as equity in companies. For income taxes the top 1 percent paid a greater share of individual income taxes (38.5 percent) than the bottom 90 percent combined (29.9 percent). For wealth the distribution is even more skewed.
I agree there are a lot of things to figure out. That was and is true of our current system too. At one point the rules for all its loop-holes didn't exist and they had to be created and that didn't happen overnight.
If your asset depreciates, then you say its worth less next year. You decide what your random painting is worth. If you don't report an asset that should be reported, I can see multiple mechanisms:
(1) You sell it for more than X. At this point it becomes clear it should have been reported and back taxes are owed. (2) You bought it for X. If you don't report, questions would be asked. (3) There is no record of purchase and you never sell it. You might avoid paying taxes. I'm not sure what assets of significant value (over $500K) would fall into this category.
I don't have a great answer completely off the cuff about how to deal with things like a collection of rare coins. Perhaps the best answer is the easiest answer: they are just treated separately.
Sorry, what? Taxes should always be about raising money for various projects that benefit the country. If we can't see eye-to-eye on that I don't think we'll find common ground here. I'm not looking to punish rich people for being too rich. I'm looking to fund public projects like healthcare, infrastructure, and education.
I think raising money through the tax is important, but I think a more important long-term function of a wealth tax is to ensure that large fortunes eventually revert to the mean rather than sustaining in perpetuity for generations. (Unless they continue to be invested with above average returns for generations.)
Also - there are many taxes that exist not for the purpose of raising revenue, but for the purpose of a policy goal. To deny this would be to deny how a great deal of how modern public policy works.
I don't think anyone would have much of a problem with the simplistic scheme applied to rare art though.
One can imagine that public charities or government assets for example are exempt from such a scheme (since they don't pay tax anyway usually).
How long until some rich art collector starts a charity to hold their art and protect it from being auctioned?
I'm not a lawyer - but it seems like one obvious factor would take into account where the artwork purchased by the charity resides. Is it in a private residence? A freeport? Probably not really a charity.
Is it hanging on the wall in the Art Institute of Chicago? Might be fine.
Then the question is what happens if the charity tries to sell it back to a private collector at some future point. Might be allowed as long as back taxes are paid assuming some appreciation schedule.
I think the more general point is that policy is _hard_, and to assume that something doesn't work because you've thought about it for 2.5 seconds is probably a bad assumption to make. Most of our existing laws/policies would be similarly easy to attack if distilled to one sentence. There's a reason actual policy and laws are really long.
You however, seem to think that because you can find a corner case in a two line proposal, the whole thing has no merit.
Maybe someone knocks on your door and says "I just bought your house. Get out." That would be pretty unpleasant.
Or, more on topic for this site: maybe they do that with your startup.
Do you have a source for this? People keep repeating this over and over, but I have never seen a shred of evidence for it. It seems some people have just decided that they hate inheritance and thats just it, no evidence required.
I would encourage you to look at the most unequal countries in the world by wealth. You may find it surprising that none of them are "feudal".
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_in...
Edit: I don't mean to be snarky, apologies if it comes off that way. Unfounded ideas just bother me, and I would love to gain new perspective forming info.
Take a look at the current housing market craze where wealthy/institutional buyers are taking advantage of low interest rates to buy properties with all-cash, inspection-waived offers above asking price, in some cases whole neighborhoods at a time, so as to rent them out. This is a privilege unavailable even to the upper middle class, and could very well turn into a sort of neo-feudalism if left unchecked.
It's also not unprecedented for companies to own entire towns and pay employees in company "scrip" that was only redeemable at company stores, a practice which lasted well into the 1950s and (after some googling) apparently was tried by the Mexican subsidiary of Walmart as recently as 2008.
Looking at the broader state of the economy, wages have been stagnant for decades; property, healthcare & childcare (at least in the US) and education are more expensive than ever. With the exception of food, everything that matters in life is more unattainable for the average person, and everything that doesn't matter is super-cheap, with no signs of those trends reversing. How does that not turn into a form of neo-feudalism if left unchecked?
The last time we "checked" it (in the US) it took decades of labor protests/riots that often turned bloody and the effects of a couple of world wars. Historically plagues (that actually kill a lot of people indiscriminately) and wars are just about the only re-distributive methods that have proven successful in the long term. Unless we want a repeat of some real nasty history, we need a historically unprecedented way to redistribute wealth.
The Netherlands topping the list has average house prices at EUR 400k(massive spike in prices in the last year), while average annual income(pre tax) is EUR 60k.
Feudal economies were actually powered by wealth taxes. So putting in a wealth tax won't do anything to avoid it becoming a feudal society. Further, confiscatory taxes[0] (of which wealth taxes are but one type) are favored by dictatorial regimes throughout history. I don't think we want to go down that road.
Wikipedia has a great summary on feudal taxes[1], and they are based on wealth (usually land and hides). It's actually a pretty good summary of a long period of time, and a complex topic to begin with.
[0] - https://www.merriam-webster.com/dictionary/confiscate [1] - https://en.wikipedia.org/wiki/Taxation_in_medieval_England
So please let’s not hot-take it to the extreme
In the mid-term we’re looking at some sort of weird hybrid plutocrat/government hybrid with an American flavor and a Chinese flavor. Everyone else is in the middle with the scraps.
Lenders will quickly adapt to give loans without requiring collateral
1. drop the corporate tax rate to 0%. Most notably, these corporations would follow the REIT tax policy that requires them to distribute > 90% of taxable income to shareholders.
2. Move Social Security and Medicare into the Progressive Income Tax (it being flat on income is regressive)
3. Offset #1 and #2 with a higher income tax (especially for capital gains)
I agree that a wealth tax is not the way to go. But there are other ways to skin this cat. The big takeaway I got from the article missing in your summary is that the wealthy take loans secured by unrealized gains in order to finance their lifestyle.
So what if we found a way to make a rule that using unrealized gains as collateral for a loan was, for tax purposes, the same as realizing the gains? (You might need to tweak the rule for fairness but the basic point remains.)
I think aggressively closing loopholes in the current code could go a long way (you mentioned a couple, like charitable donations and tax havens).