Does the "buy-borrow-die" (BBD) strategy really exist? If so, is it a good idea? If you haven't heard of it, the BBD strategy claims that the very wealthy borrow against their assets so that they never have to pay capital gains taxes. The idea is that the step-up in basis on death (which eliminates/reduces capital gains taxes for estates) that heirs receive enables this tax avoidance. The argument is that this tax avoidance requires a wealth tax so that the rich can pay their fair share. I heard this explained on a political/comedy show by a prominent senator who I shall decline to name. In any event, to the extent that BBD does exist, it is a bad idea.
The biggest flaw in the strategy is that it might fail spectacularly. Imagine having borrowed to avoid a 20% capital gains tax on Kmart or any of the banks that failed during the Great Recession. The investments are kaput, but the debt would still be due. On top of that, a company doesn't need to collapse for the strategy to fail. If an investor borrowed for ten years at 2%/year, a very low rate, he or she would still have paid the equivalent of the tax in interest payments that most likely would not be deductible. If the price went sideways or down, the strategy failed.
If we are talking only about the very rich, those who have assets valued at more than $15 million, twice that for a married couple who has done proper estate planning, a wealth tax already exists. They will be taxed upon death at 40% of the excess. That includes their homes, investments, life insurance, etc. The estate tax is double the capital gains rate, is easier to enforce, is cheaper for the government and taxpayers in compliance costs, and it does not discourage entrepreneurship. The problem that the senator failed to make clear is that it is states that have had to reduce or eliminate their estate taxes to prevent wealthy people and businesses from moving to low-tax states. A wealth tax might provide a one-time windfall, but no entrepreneur in her or his right mind will ever start a business in a state that has a wealth tax. Forget the potential constitutional problems.
My observations only apply if we assume that the purpose of taxation is to efficiently pay for government services. If the objective is to limit the influence of the very rich in politics, there are far more effective means to accomplish that end without destroying America's vast creative advantage over the rest of the world. In any event, BBD is a risky and unproductive long-term investment or tax strategy.
P.S. If you want to watch a cruelly funny French film that loosely deals with taxes on the wealthy, I recommend Le Dîner de Cons (The Dinner Game) or literally, the dinner of fools. The arrogant rich get their comeuppance in a far more amusing and less harmful way than a wealth tax.