> All capital gains are erased.

Right. And then 40% estate taxes are applied.

All you're saying is that you can borrow money and invest it and hopefully you make more off of the investment than the interest on the money.

A loan is not income. After all, when you borrow a half million to buy a house, you aren't charged income tax on that. You also are not charged income tax on stuff you charged on your credit card.

Borrowing on margin is no different.