[bzbarsky]

Not all shares can be sold. Especially at all times (blackout periods, etc.)

The problem with the oft-cited options example is that tax is levied on gain of an asset that in fact cannot be legally sold at the time the tax is levied and is often enough worthless (or worth a lot less than at tax time) by the time it _can_ be legally sold.

Asset-based taxation on liquid assets with deep markets and clear prices is indeed probably fine in various ways. But if you tax other sorts of assets there are various problems, and if you only tax the easily-taxable ones people will turn to the other ones to avoid taxation...