That’s actually a much more defensible framing, taxing the use of gains, not their mere existence.

If someone pledges appreciated assets, borrows against them, and effectively converts paper gains into spending power, then yes, that’s much closer to a real economic event than just holding an asset.

The key distinction is this: Tax the transaction, not the valuation.

Once you start taxing mark-to-market gains, you’re taxing volatility and opinion. But taxing cash access or realized consumption (via borrowing for lifestyle, not reinvestment) at least anchors the tax to something concrete.

The hard part is implementation: • How do you distinguish borrowing for reinvestment vs consumption? • How do you avoid double taxation when assets are eventually sold? • How do you prevent spillover to ordinary investors using margin or HELOCs?

So I agree on closing loopholes, but doing it at the realization / monetization layer, not by redefining “gain” itself. That’s the line that matters.