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Property taxes on houses are levied annually...The home/property value is "assessed" by comparing it to other similar properties, and a number is arrived at
Not everywhere. Here in California, for example, in 1978 a law was passed that limits annual increases in assessed property valuations to no more than 1% per year. So as long as the real estate market is going up, which is most years, they just tack on a 1% increase to the previous year's valuation. It has nothing to do with market value.
And what about the people investing in businesses, like venture capitalists? Those businesses can be tricky to value. For that matter, many businesses have unrealized value and can be sold. Would a business owner have to pay taxes not only on their income, but also on the increase/decrease in the value of their business each year?
While there's a case to be made that taxing unrealized gains would be "fair", it seems a logistical nightmare. I can't see it being done without armies of government-approved appraisers all trying to value all these properties and businesses, and as was mentioned earlier, works of art, baseball card collections, etc, etc.
Plus a big uptick in lumpy cash flow for tax revenues, depending on whether the markets went up or down each year. That would make budgeting even more challenging than it is already.
