Is you are willing to tax wealth on the current value of an often illiquid asset, are you equally willing for the government to refund the owner if the value of an asset drops below the purchase price in the same tax year?
You should ask governments why they so consistently choose the opposite - bailouts for "too big to fail", and an ever-increasing round of tax breaks the rest of the time.
It may also have something to do with the fact that billionaires can buy significant political control of policy in our supposed democracies, while poor people organising to promote their interests are bullied and sneered at.
You already can mark down and carry losses forward into future tax years. Extremely wealthy people do this to get their taxes down to $0 regularly, including Trump.
Also, if I’m underwater on my house, I don’t get a break on my property insurance. I still have to pay the assessed rate.
This “no taxes if I take a loss” is an extremely selectively applied principle in the US legal code.
If not, why not?