Is an unrealized loss tax deductible?
Even more to the point, if they tax your unrealized gain one year and then your investments tank the next year, do they REFUND the tax you paid? (we all know the answer to that)
I could see a ratchet where your investments are up one year and they tax you, then they are down the next and you get nothing. Then they go back up in Year 3 and tax you again. Year 4 they go back down and you get nothing. Rinse and repeat. You pay and pay and pay and pay and never accumulate any wealth.