[bhupy]

> You're not really able to tax unrealized gains most of the time because they could disappear or go negative

Very fair point.

> I'm not entirely convinced that this behavior of living frugally to pay less tax is something we need to 'prevent'.

I think I buy this argument. Another commenter had the suggestioin of dividing the actual realized gain by the number of years the asset was held and assess taxes as if the person made that quotient in income for each of those years. I can't think of anything wrong with this approach.