There's a simple solution to it, no? Abolish all taxes on income, dividends, or capital gains. Introduce a single tax on wealth. Every year tax a certain percentage of one's capital holdings, whether capital gain is realized or not.
Look at it this way, I can either buy a bigger house with more debt whenever I have some extra money laying around, or I can save that cash and have the government take some of it every year. You also incent people to spend money on non-material things like travel and entertainment, rather than spending cash on a reasonable car (because leasing the car and blowing the other $20k in Vegas sounds like more fun).
There’s a simple maxim in taxes and economics - do not tax activities you want to encourage, and tax those which you want to curtail.
If you buys a bigger house, if equity portion of that house is above a taxable threshold -- say a $1M house, and you have $200K equity, then that equity will be taxed. Very minimally I might add.
> do not tax activities you want to encourage, and tax those which you want to curtail.
That's not working out currently. Unless you want to encourage massive wealth inequality.
Spit balling here, but I'm not sure a wealth tax will fix it.
Another problem though is valuation of that asset. There will be huge incentives to show lower valuations, but that's already a case for things like real-estate property taxes, and somehow the system still works.