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There is a (relatively) simple solution to this; Make the act of taking out a loan against the value of your assets (which the wealthy tend to do, for liquid cashflow) a Capital Gains taxable event.
This has actually been my preference vs a straight up wealth tax.
I wouldn't really call it simple though as these types of things can easily be done off books. You'd have to be able to do audits like how did you pay for this with that cash kinda thing still.
You also need to deal with repayment and prevent double taxation, which is doable to sort out but not easy.
I meant relatively simple in the sense that it shouldn’t require a full re-write of existing laws - just an addition to, knowing full well that enforcement would be the biggest challenge.
Hefty fines (over and above the value of the assets used as collateral) on the lenders if caught not reporting could help ensure compliance.
Another way to tackle it might also be to treat the end of every financial year as a Capital Gains Event for assets over a certain threshold? That way, it just becomes part of people’s annual tax returns and taking out loans wouldn’t necessarily help avoid it.
eg. If FY26 saw Elon Musk’s wealth increase by $10bn, he would owe ~$2bn in Capital Gains to the IRS.
Also, to head off possible arguments: Given that the US taxes its citizens even if they live/work abroad - there would also be negligible risk of capital flight.