[atmavatar]

Arguably a bigger cheat is that if you have enough wealth tied up in stocks, you can realize capital gains for the sake of taking out loans to live off of without having to realize the gains for the sake of taxes. Then, you can pass those investments onto your inheritors with a stepped-up cost basis so they don't have to pay tax on the gains, either.

[ty6853]

Yes even though I'm no fan of taxes, allowing borrowing against gains is clearly "realizing" them, it is an absolutely absurd fiction that allows this to be untaxed.

[mindslight]

Sure, that was already mentioned and I skipped mentioning it again because focusing too much on that one thing is likely to distract from the overall problem. It's not bigger, it's just different. It has also been made less attractive now that interest rates exist again (at least for the time being until Krasnov gets his hands on that lever of market manipulation)

(another one in the same vein is that when you donate an appreciated asset, you get a tax deduction of the unrealized value)

[debug-desperado]

Ah yes: buy, borrow, and die. It definitely works.

I don't think stepped-up basis should go away though, otherwise it's just the government getting a second cut of the inflation it causes.

The bigger issue for society is that our equity markets just don't have any real risk of losing your lunch anymore, so these strategies emerge.