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How would it work if we treated money obtained by borrowing against stock holdings as "realized gains"? That seems like a loophole that could be closed.

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whats the difference with a mortgage then, a securities backed loan.

Well nothing, I think what is being proposed is to trigger existing capital gains taxes when an asset is borrowed against, the same as if it were sold. Most places exempt personal homes from capital gains taxes already, so it wouldn’t affect them. It would affect

- someone who bought an investment property, which then appreciated, and then they wanted to take out a larger mortgage against the appreciated value to leverage it into buying another property.

- Someone borrowing against stock to avoid realising gains by selling it

That seems… reasonable to me?

Thank you. Yes, that's precisely what I mean. I've floated the same idea a few times on this forum and others. I've asked, but have yet to see someone point out a systemic downside. (I'm not any kind of financial sophisticate, so I'm well aware that I might be missing something!) In fact, it seems to me that having people finance their lifestyles by borrowing against assets adds a degree of leverage risk to the system, and ought to be discouraged just on that basis.

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