Is borrowing against appreciated assets effectively a way to avoid capital gains tax?

I’m trying to understand a specific behavior in the tax system.

High-net-worth individuals can hold appreciated assets (like stock), avoid selling them, and instead borrow against those assets to access liquidity. Since they don’t sell, they don’t trigger capital gains tax.

From an economic standpoint, this seems similar to realizing gains, but without a tax event.

My questions are:

• Do economists generally view this as a loophole or just a natural outcome of how capital gains are structured?
• How significant is this in practice for explaining low effective tax rates among ultra-wealthy individuals?
• What are the main challenges in trying to tax this kind of behavior without moving to full mark-to-market taxation?

I’ve seen suggestions that large-scale borrowing could be treated as a partial realization event (or trigger some kind of prepayment tied to future capital gains), but I’m not sure how workable that is in practice.

Curious where this breaks down—especially from an enforcement and behavioral standpoint.