They would need to allow a lot of other refunds if that really does start becoming the case. Ex: All capital loss should also be deductible against regular income, carryover capital loss over the years should get interest from the government much like tax you don't pay gets interest on you, etc.

If that sounds crazy, it is, but it also makes something as crazy as tax on unrealized unliquid gains you cannot sell too somewhat possible. Many, many new businesses that are growing would essentially have to be liquidated to the government in a few years.