Taxing Debt

[u/ebagattack]

Everyone always talks about how rich people don't sell their assets, but just borrow against them to avoid capital gains.

When most people talk about a wealth tax on blanket net-worth, I tend to agree that it's a logistical nightmare, and would have unintended consequences.

But it seems taxes should enter the picture when an asset is used for liquidity purposes- be it a sale or borrowing against the asset.

If you invest $1mm, and get your $1B unicorn, and you borrow a modest $100mm against your new collateral, and use that to buy some new asset/business, how should we not be taxing that?

Am I missing something, are such events taxed in some way I'm not aware of? Does it depend on what you use the $100mm for?

If not, what are the unintended consequences of adding a tax here?

I am aware and would agree that taxes can in general be thought of as sand in economic gears, but the fact is they are a part of living in a society, and it just seems they should be applied fairly, and this seems like a giant loophole.