> You use it as collateral for a loan and just spend the laon while the asset continues to appreciate (hopefully) faster than the interest rate.

Gosh, that hopefully is doing a lot for you sentence lol. Risk based economies function on that "hopefully". To phrase this another way, "if you borrow money against an asset, invest it in the economy, and make more than the interest in returns, you can avoid selling the asset to cover the loan", which sounds a whole lot more sane. It's a bit scary to imagine a world in which borrowing against an asset could not be profitable as that would mean that all investment in the economy would halt, no?

I'm not even against this tax fwiw but you're glossing over some major details in how that tax deferral works. The major issue is how cap gains is handled on death.