FTR: I'm pretty sure that making collateralization a realization event originated with me. It was definitely my idea on the ZZL. Surprisingly, it was sort of my idea among law professors as well. I attended a talk given by one of these two authors below, and my question sparked about 20 minutes of commentary and then there was some email/listserv activity after that. I very much doubt that I was the
first to think of it or talk about it (it's not a complicated idea), but the attendees at that talk seemed surprised by it. I was surprised that it was a surprise.
I only say that because the idea has not really picked up steam outside of some academic circles, to the best of my knowledge. It's possible that's because the idea has problems associated with it that I haven't seen. I didn't actually write in this area, and I didn't read broadly -- I'm not a tax guy, so it was never more than an idle interest. So there might be some literature that casts some amount of cold water on the idea.
From my perspective, it seems perfectly intuitive.
In this article, Fox and Liscow propose a tax on billionaires that would impose a tax on borrowing against assets and explain how it could be designed and how i
papers.ssrn.com