Not only that, but if they are going to tax unrealized gains annually, it seems they also would have to issue annual tax credits for unrealized losses. You can't just tax the unrealized gains. What if the stock goes to a penny and you sell it?

The end result is the same as now, you tax the capital gain from the time you bought the stock to the time you sold it.

I have heard rumblings of removing the stepped-up basis that occurs when assets pass to heirs. But I think the problem with this is keeping track of the basis over generations. What if stock has been in the family for 3 generations? Who knows and tracks what great-great grandma paid for a stock?

Many people have to pay tax on their income before they use it too. Why should the person sitting on a fat investment portfolio not have to?

Can I borrow against these unrealized gains you say make no sense to tax and still spend the money, but perhaps never pay taxes on the gains ever??

If instead of taking income I take a carried interest in my portfolio can I defer taxes - maybe forever?

By the way, all these are the loopholes that are CURRENTLY being used by the well off to avoid paying taxes.

Seriously - why do you think portfolio lines of credit are so popular?