You tax the whole value of the loan? Then what do you do when the assets finally get liquidated? You pay CGT as well?
So I earn $A and pay $B income tax leaving me with $C.
I take $C and use it to buy stocks. I later want to borrow money against my $C (+ gains, $D) of stock, and now I pay income tax on $C + $D presumably at the same rate as I paid on $A, let’s call that $E.
Later I sell up, with an additional $F of gains. Now I pay capital gains on $D+$F, call it $G.
So from my $A+$D+$F of income (the initial income plus the capital gains on my investment), I’ve paid $B + $E + $G in tax (income tax on the full amount I earned, income tax on the amount left after I paid the first batch of income tax plus income tax on any gains made on my investment before I took out the loan, and then capital gains on the full gains both those which have already been taxed at the income tax rate and those which haven’t yet been taxed).
Not sure that’s actually easier.
So I earn $A and pay $B income tax leaving me with $C.
I take $C and use it to buy stocks. I later want to borrow money against my $C (+ gains, $D) of stock, and now I pay income tax on $C + $D presumably at the same rate as I paid on $A, let’s call that $E.
Later I sell up, with an additional $F of gains. Now I pay capital gains on $D+$F, call it $G.
So from my $A+$D+$F of income (the initial income plus the capital gains on my investment), I’ve paid $B + $E + $G in tax (income tax on the full amount I earned, income tax on the amount left after I paid the first batch of income tax plus income tax on any gains made on my investment before I took out the loan, and then capital gains on the full gains both those which have already been taxed at the income tax rate and those which haven’t yet been taxed).
Not sure that’s actually easier.