A loan is not (usually) taxable income. Taxable income is used to pay back the loan. This keeps people's capital invested longer term, which is part of the pur

A loan is not (usually) taxable income. Taxable income is used to pay back the loan. This keeps people's capital invested longer term, which is part of the purpose of capital gains tax incentives. In other words, it's not a loophole. It's working as intended.