Anyway in general I think it is a great idea for making the tax system far more fair.
It doesn't make the tax system more fair. Mark to market penalizes saving money by creating an artificial reason to force investors into paying taxes based on the theoretical amount they might get if they had sold the asset.
It devalues a great many type of assets -- if you have to get that painting appraised every year
for mark to market, are you really going to risk buying a $500 piece of art?
Now not only can you not have a nice decoration for your home (due to the burdensome costs of appraisal and accounting
paperwork burdens), but now the seller cannot dispose of that piece, so economic value is lost, and lots of people are hurt.
Mark to market is also incompatible with the conditions under which Congress can lay taxes. The constitution doesn't allow the Federal government to tax property. The US congress can lay duties, excise taxes, tax commerce, etc, actual transactions, but not the condition of ownership of property which is protected under the 5th amendment of the constitution.
For the same reason that the US government does not have the power to assess a tax based on
home ownership, for example , there is no power of taxation that permits requiring property owned to be appraised
and "marking owned property to market", until commerce is actually conducted.
In a mark-to-market system if people don't want or can't afford the taxes, then they have to sell the asset to cover the tax,
which means they lose capital, and therefore resources required to fuel economic growth.
The government is the worst possible hands for lost capital to fall into ( they are among the least efficient
at spending money, and it's basically like burning the money), in other words -- the overall economy suffers greatly.
That creates a great disincentive to maintaining long term investment in the US,
and creates inventive for moving money to countries that don't have asset taxes,
which is ultimately a situation that is unfair to the people.
The other problem for investors is the risk of paying mark to market tax based on a market overvaluation
of an asset, actually creates an unfair situation, a double loss when selling - loss in capital value, and loss
due to taxes paid, since the government never refunds capital gains taxes, when they are
later cancelled out by a greater equal loss.
IF the tax system were actually fair, every penny of investment loss would be fully refundable
against every penny of tax paid in the past based on supposed gain.
And an anticipatory refund would have to issued based on 'losses marked to market',
if the investor overall had a negative market treatment for the year.
But as with mark to market, there would be a serious deflationary effect which
would likely cause what's left of the economy to implode.