How is that any different than paying with a credit card or using reward points? Those aren't taxable or treated like income so why should loans and mortgages be?
Someone sufficiently wealthy can push off taxes until they die and their heirs can use the step up basis[1] to avoid them entirely.
There's also a huge advantage in the ability to choose when one wants to pay taxes even if they eventually do get paid. Buffet loves to talk about unrealized gains as a loan from Uncle Sam at zero percent interest.
- credit card: nothing
- mortgage: the house
- car loan: the car
One could make rules about loans secured by assets with unrealized gains (with an exemption for a primary residence).
PS Credit card reward points are taxed as interest income in the US so look for a 1099 INT.