It really feels like everyone responding to this is willfully missing the point. The question everyone is asking is, "but how can you levy a tax on an asset before any gains have been realized?"

And the analogy to property taxes is a good one. You pay more in taxes when your property increases in value. If the value goes down it'll be reassessed and you'll pay less. And this repeats year after year.

Now, look, you can think that's a good system or you can think it's a bad one. But it's not some esoteric, inscrutable concept.