> A beneficial owner can simply sit on their share of the company as it earns profits and becomes more valuable, and incur capital gains taxes if and when they sell.
That's half the problem with income taxes. They provide an incentive for the rich to never sell their investments because if they sell they have to pay tax, meanwhile they give the working class less incentive to invest rather than consume because they do have to pay the tax on their earned income immediately even if they invest it rather than spending it.
So you get bigger corporations (the rich can't sell to invest in a startup without paying tax), more incentive for international tax avoidance/arbitrage to the detriment of smaller businesses who can't do that, and more wealth inequality.
> They can defer these taxes indefinitely - if they need cash, they can simply use the stock as collateral for a loan in lieu of realizing capital gains taxes.
Because we're not using consumption taxes. You can't avoid VAT by taking out a loan.
> And when they die, the cost basis gets reset, wiping out whatever taxes have been deferred (and replacing them with estate taxes, if those haven't also been optimized away).
Again solved by consumption taxes, because there is nothing to reset if the money is taxed when spent rather than earned.