Tax the sale of everything and the entire problem goes away.
At that point, it doesn't matter that they borrowed against their positions because spending the money they borrowed still taxes their stocks indirectly.
Exactly, people constantly debate this but it's a solved problem. Don't tax input, tax output.
It also gives you a better scalpel. Instead of trying to wrangle the different income structures (blends of w2, 1099, stocks, bonds, real estate, etc etc), differentiate via the purchases:
- superyachts: very high tax
- luxury cars: high tax
- vacation homes: high tax
- clothes: low tax
- staple groceries: no tax
At that point, it doesn't matter that they borrowed against their positions because spending the money they borrowed still taxes their stocks indirectly.