This is just a guess, but I think it might be more about the government not wanting to put valuations on complex assets. Let’s say I own a network of dry cleaners in Los Angeles. It’s a private business with no public business to compare it against. Cash flow is X, but is the business worth 10 million, 20m? How is the government supposed to determine what it’s worth? Now, let’s imagine your business is Koch Industries. We know it’s worth many billions but there’s a VERY broad range of what it might be. Without taking the stock public, its basically impossible even for top investors to value (investment bankers who value businesses for a living get it wrong all the time), let alone the government.

Even public businesses are not trivial to value for very large shareholders who don’t have the ability to easily sell all shares at once without moving the market quite a bit. But in any case, removing this loophole would just encourage the ultra wealthy to put their money into opaque businesses and then try to “value” them as low as possible. So it’s not so easy to fix.