Suppose I had invested $1 million in a private company 10 years ago. It is now worth much, much more, how much no one really knows. I go to a bank and mention I

Suppose I had invested $1 million in a private company 10 years ago. It is now worth much, much more, how much no one really knows. I go to a bank and mention I own 100,000 shares of XYZ corp. Could I have a loan please, collateralized with some of my shares? The bank says sure, how about $2 million at prime +0.3%. I say that's just fine. Under current tax law there is no capital gain recognized, and it's hard to imagine how there could be, I don't even know how much my income is at this point, only that some bank is pretty sure it's bigger than $1 million. It's not that this was some complicated tax avoidance strategy through the Isle of Mann either, it's just a loan. Taxing non-cash income as cash income causes many difficult problems. Ask folks who exercised options on shares whose value evaporated during the lockup period how they felt about their tax bill? This is an arms race we can't win, I'm pretty sure there's always going to be assets with values to murky to tax, but not too murky to borrow against no matter how generous we are with defining income. The top 0.1% are going to be a moving target, there's too much money at stake for them not to be.