There's no zero risk profit here. Getting a loan using an asset as collateral is not some loophole to evade tax. The loan isn't used for consumption with zero residual value - otherwise how do the lender expect the borrower to service the interest? The loan is used to produce more profit via investment, increasing overall wealth, which means it's correct to not tax it the same way you would tax profit or capital gains.
At the point of consumption is where the best place to tax occurs.
For personal investments it can work out the same way because the interest rate on the loan can be negotiated to a much smaller level than what is available to normal people if you have a lot of money. So as long as you make a reasonable bet that your fairly liquid investments (stock in a public company is really liquid) can return more value than your loan repayment. There’s some risk but it’s not that insane and it’s manageable.
> At the point of consumption is where the best place to tax occurs.
Keep in mind that sales tax still exists but it’s a flat rate and is thus what’s called a regressive tax (vs a progressive income tax). So a rich person using a collatorized loan against their stock portfolio is going to pay less relative tax than a normal person receiving income who paid both income tax & the same sales tax amount. Yes there can sometimes be a luxury sales tax but all that means is that goods that normal people wouldn’t even be able to afford in the first place have a marginally higher tax rate.
i'm not referring to sales tax regarding point of consumption. I am referring to personal income taxes (capital gain or otherwise).
As soon as the profits move from being re-used for investment to becoming personal wealth (intended for consumption), the taxation should occur.
(Maybe not of the firm that originally took the loan - but someone, eventually, because the alternative is economic collapse.)