The "hard / impossible" part is that the taxing unrealized gains requires a policy around recognition of unrealized losses, and a policy in either direction has empirical and well-understood adverse consequences. Governments generally avoid tax policies that unavoidably have nasty and unmanageable adverse consequences that exceed the value of the revenue generated.

If you do not recognize unrealized losses, it strongly biases investment toward low-risk rent-seeking investments because the expected return is much higher than long-term high-risk investments under this tax regime. Startups, biotech, etc become unattractive as a place to put money because the financials don't make sense relative to rent-seeking and investment is not a charity. Paying taxes on non-liquid assets is a massive risk for average people, greatly reducing the practical investment opportunities available to them.

If you do properly recognize unrealized losses, it creates a scalable new mechanism for tax avoidance that would reduce tax revenues. Not only are valuations strictly notional and effectively fictional for many assets, but intangibles are often entangled in asset values that can't be accounted for in a sane way (e.g. the act of transferring an asset can greatly reduce its value ipso facto). These intrinsic logical inconsistencies allow almost any tax story to be constructed using assets.

While no government wants to deal with the consequences of broadly recognizing unrealized losses, they also don't want to incentivize all investment to go into low-risk rent-seeking endeavors like real estate instead of long-term high-risk investments in technology and innovation. It is a damned if you do, damned if you don't, so governments generally opt out of this type of tax altogether.

But you're still discussing unrealized gains/losses, when I'm suggesting to ignore them. If someone is borrowing millions, hundreds of millions, or even billions against untaxed collateral, then they should be taxed on what they borrow, limited to how much they can borrow, and/or taxed more on what they buy. It's their and the bank's problem if they're borrowing against unrealized gains or losses.

The wealth inequality problem in the U.S. is INSANE. If the U.S. had a population of just 10,000,000, literally 12 people would have as much wealth as the bottom 60%, i.e., 6,000,000 people, combined. And yet, here we are talking about how "impossible" it is to simply tax wealthy people.

These systems were made by humans. They can be fixed. Wealth inequality and taxation of the wealthy are not laws of nature that can't be changed.

Finally someone who gets it. It isn't impossible to do but you have to take into accoutn that it isn't realized. Imo the best way to do that is actually aggressive consumption taxes on the things that the wealthy primarily consume (vacation properties, yachts, private schools, etc). Taxing loans directly is difficult to do because I imagine you don't want to be taxing student loans or mortgages. I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes.

> I guess you could tax all collateralized loans above a certain collateral value but that can be gamed. So personally I prefer consumption taxes.

Interesting idea. We sort of already do this, we apply property taxes based on the value of the property as pegged at purchase (re-assessed over time). We could exempt loans on collateral already subject to property (or other value-based) taxes, but could then put a wealth tax on any other asset used as collateral for a loan at the collateral value agreed on by the lender.

Wealthy person: whoops, my wealth ended up in a bank account in Vanuatu. Unfortunately it's held by a foreign corporation there that occasionally donates to my trust. I don't have control of it, it's in control of a lawyer who has strict contractual terms by which he can only transfer into a few trusts. Really is a shame!