OP here. The point is that taxation can't really be avoided. If you take out loans against your shares to fund a lavish lifestyle, those loans need to be paid back (and you'll also get taxed on much of your consumption via sales taxes / VAT).

Now, sure, there's a way in which you can just keep rolling over loans with new ones until you approach some max % of your collateralized shares. But this has practical limits, and you're still not really avoiding anything. What's happening practically is that the gov has an IOU for 20% of those shares, where the value of that IOU is growing faster than the servicing costs of their own debt. So pushing out the date of realization is basically fine. The rich person may never pay those taxes within their own lifetime, but someone will. And the gov has no meaningful reason to care who pays or when, so long as the increase in share value outpaces their borrowing costs (pretty easy).

EDIT: Should have said 15-20% to be precise, as lowest rate is 15% for long-term holdings.