Alternative to Unrealized Gains Tax Idea

My limited understanding of how rich people avoid taxes goes like this:

Step 1) Make no "Income" only gains on investments

2) Don't incur capital gains on those investments by never selling them

3) Take out loans, collateralized by your investments - this is the money you spend to live

4) Die. Capital gains get reset to zero and you pay people a lot of money to also avoid estate taxes.

To get rich people to pay taxes one idea that is often floated is to tax unrealized gains on investments. An alternative I thought would be something like: if you assets exceed $100,000 your taxed on either income and capital gains OR the amount of money you spent in the previous year, which ever is higher. I assume there is some reason this would not work, please let me know what that is ;)