I think it's reasonably fair to point out that, sure, while these people don't have the extra wealth as
income, they did indeed grow wealthier, and significantly so. And generally we tax when things make money.
A couple points about common rebuttals:
"It's not liquid so it's hard for them to pay taxes on it" - we already tax illiquid things like property taxes and when people get income that's not cash, like having debt forgiven or being given a gift of stocks. And people who have debt forgiven or are given stocks as income frequently aren't as likely to have cash to simply pay the taxes when compared to these extremely wealthy owners of capital.
"it might go back down and then they paid taxes on something they couldn't realize" - this applies to property taxes too, fwiw. But also, we deal with similar issues already - if you sell a stock at a loss, you can use it to reduce your taxable income. There's workarounds here if we are at all willing to attempt to tackle this.
And it's worth noting that, sure, this might be taxed when they do eventually sell, but:
1. there is not always a when. You can do lots of interesting things with assets like this, such as borrow against them.
2. money now is worth more than money later. Letting people defer paying taxes on unrealized capital gains is VERY generous tax treatment.
It's also worth noting that this doesn't have to make life hard for John Smith, Dirt Farmer, who owns $5000 of SPY. Just do what we do for other common scenarios like this - for instance, not having to pay capital gains tax on your first $X of cap gains for your primary residence.